Forward looking statements & non-GAAP financial information
This presentation contains "forward-looking" statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements relating to the impact of the acquisition by Wabtec of GE Transportation (the "GE Transportation merger") and statements regarding Wabtec's expectations about future sales and earnings. All statements, other than historical facts, including statements regarding the expected benefits of the GE Transportation merger, including anticipated synergy benefits and statements regarding Wabtec's plans, objectives, expectations and intentions; legal, economic and regulatory conditions; and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "predict," "continue," "target" or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) unexpected costs, charges or
expenses resulting from the GE Transportation merger; (2) uncertainty of Wabtec's expected financial performance; (3) failure to realize the anticipated benefits of the GE Transportation merger, including as a result of integrating GE Transportation into Wabtec; (4) Wabtec's ability to implement its business strategy; (5) difficulties and delays in achieving revenue and cost synergies; (6) inability to retain and hire key personnel;
- evolving legal, regulatory and tax regimes; (8) changes in general economic and/or industry specific conditions, including the impacts of tax and tariff programs, industry consolidation and changes in the financial condition or operating strategies of our customers; (9) changes in the expected timing of projects; (10) a decrease in freight or passenger rail traffic; (11) an increase in manufacturing costs; (12) actions by third parties, including government agencies; (13) the severity and duration of the evolving COVID-19 pandemic and the resulting impact on the global economy; and (14) other risk factors as detailed from time to time in Wabtec's reports filed with the SEC, including Wabtec's annual report on Form 10-K, periodic quarterly reports on Form 10-Q, periodic current reports on Form 8-K and other documents filed with the SEC. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this communication. Wabtec does not undertake any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
This presentation as well as Wabtec's earnings release and 2020 financial guidance mention certain non-GAAP financial performance measures, including adjusted sales, adjusted operating margin, EBITDA, adjusted EBITDA, adjusted effective tax rate, adjusted income from operations, adjusted interest and other expense and adjusted earnings per diluted share. Wabtec defines EBITDA as income from operations plus depreciation and amortization. While Wabtec believes these are useful supplemental measures for investors, they are not presented in accordance with GAAP. Investors should not consider non-GAAP measures in isolation or as a substitute for net income, cash flows from operations, or any other items calculated in accordance with GAAP. In addition, the non-GAAP financial measures included in this presentation have inherent material limitations as performance measures because they add back certain expenses incurred by the company to GAAP financial measures, resulting in those expenses not being taken into account in the applicable non-GAAP financial measure. Because not all companies use identical calculations, Wabtec's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. With respect to Wabtec's guidance to certain non-GAAP adjusted financial measures, it is not possible, without unreasonable effort, to forecast and quantify with reasonable accuracy certain adjustments that would be necessary for a reconciliation to the corresponding GAAP financial measures.
2
Note regarding 2020 business operations and financial guidance
DURING THE CONFERENCE, WABTEC MANAGEMENT WILL DISCUSS ITS PREVIOUSLY ISSUED GUIDANCE FOR 2020. THIS GUIDANCE HAS NOT BEEN REVISED FOR ANY POTENTIAL IMPACT DUE TO COVID-19, AND MORE RECENTLY WITH VOLATILITY IN THE COMMODITY AND FINANCIAL MARKETS.
TO DATE, WABTEC HAS SEEN LIMITED IMPACT TO ITS FIRST QUARTER. HOWEVER, WE ARE CONTINUING TO MONITOR OUR CUSTOMERS AND THE END MARKETS WE SERVE, AS THOSE COULD HAVE AN IMPACT ON WABTEC'S BUSINESS, OPERATIONS AND FINANCIAL PERFORMANCE.
3
Agenda
8:30 AM ET | Opening Remarks and Wabtec Overview | Rafael Santana |
9:15 AM ET | Portfolio Spotlights | |
Spotlight on Technology | Dominique Malenfant | |
Spotlight on Freight Services | Pascal Schweitzer | |
Spotlight on Digital Electronics | Peter Thomas / Bob Bourg | |
Spotlight on Global Operations | Alicia Hammersmith | |
Spotlight on Transit | Lilian Leroux | |
Spotlight on Regional Growth: Russia /CIS/MENAT | Gokhan Bayhan | |
Spotlight on Regional Growth: India | Sujatha Narayan | |
11:00 AM ET | Financials / Q&A | |
Financial Performance | Pat Dugan | |
Q&A |
4
Introduction
Rafael Santana
What you will hear today
- Delivering results through the cycles via world-classtechnology and innovation while leveraging significant installed base
2. Focused on continuous operational improvement and margin expansion
- Lean operations driving strong cash flow with disciplined capital allocation
- Building a stronger and better Wabtec with a purpose- driven culture of accountability
Extending the lead as #1 rail technology company in the world
- Cash from Operations conversion % is defined as GAAP Cash from Operations divided by GAAP Net Income plus Depreciation & Amortization
5-YEAR OULOOK
Mid-Single
Digit
ORGANIC SALES CAGR VS. LOW SINGLE DIGIT FOR INDUSTRY
300+ bps
OPERATING MARGIN
EXPANSION
>10%
EPS CAGR
>90%
CASH FROM OPS CONVERSION (1)
6
Our speakers
Rafael Santana
President & CEO
Gokhan Bayhan | Bob Bourg | Pat Dugan |
Regional General Manager, | Vice President, Core | CFO & Executive Vice |
Russia/CIS/MENAT | Electronics and Data Analytics | President |
Alicia Hammersmith | Lilian Leroux | Dominique Malenfant |
Vice President, Operations, | Group President, | Chief Technology Officer |
Transit | Transit |
Sujatha Narayan | Pascal Schweitzer | Peter Thomas |
Regional General Manager, | Group President, Freight | Chief Commercial Officer, |
India | Services | Digital Electronics - Americas |
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Strong global industrial portfolio with track record of innovation and significant recurring revenue
Portfolio
FREIGHT | TRANSIT |
66% | 34% |
Freight | Transit OEM |
Services | 16% |
24% | |
Transit | |
Digital | Aftermarket |
18% | |
8% | |
Freight | Freight |
Components | |
Equipment | |
13% | |
21% | |
$8.2B
'19 GAAP SALES
Geography
~60%
non-U.S. revenues
~27K
EMPLOYEES
Market
~60%
Aftermarket
S&P
500
COMPANY
8
Competitive strengths 1.
2.
Technology leader … 7,000 patents
Track-record of execution … customer
partnerships spanning 50+ countries
3. Significant installed base … mission critical products
4. Lean operations … 120+ manufacturing sites
5. Purpose-driven culture … 150 years of industry expertise
9
Wabtec value creation model
Our vision:
We will accelerate the future of transportation by building the safest, most reliable and sustainable freight, transit, signaling and logistics systems and services.
Through our scale and innovation, we will drive average double-digit earnings growth and lead the transportation industry
in unprecedented ways.
ENGAGED | INNOVATIVE | LEAN |
PEOPLE | TECHNOLOGIES | OPERATIONS |
High performance | Sustainable, quality | Continuous |
teams & leaders | solutions | improvement |
Domain expertise | High barriers to entry | Flexible capabilities |
Safety at our core | Growth driver | Culturally engrained |
INVESTED IN COMMUNITIES
CUSTOMER FOCUSED
VALUE CREATION FOR OUR SHAREHOLDERS
10
Rail is improving the world's transportation challenges
2x | 40% |
Global demand for | North America's |
transport growing | freight ton mile |
fast … freight and | is moved via rail |
passenger activity | |
will more than | |
double by 2050 |
CLEANER
<10% of freight transportation carbon emissions*
SAFER
<4% of freight transportation injuries*
EFFICIENT
Rail is 4x more fuel efficient than conventional trucks**
*Popular Science, 2019 | |
11 | ** AAR Sustainability Fact Sheet, 2019 |
Diverse portfolio of businesses uniquely positioned to
outperform the market
Freight segment
Equipment | Services | Components | Digital |
Electronics | |||
Transit segment
Transit
>20 | 2.5M | >30 | >30 | > |
% | % | % | 15 | |
% | ||||
Of the world's rail | Messages monitored | Of content on a Freight | Of North American | Rail passenger cars |
freight is moved by a | daily on Wabtec | car capable of being | freight moved through | equipped with Wabtec |
Wabtec locomotive | locomotives | Wabtec | ports managed by | safety critical |
Wabtec software | components | |||
12
Market update
Markets we're in | 2019 | ||||
North America Freight | NAM carload volume | (4.0)% | |||
NAM railcar deliveries | 5.8% | ||||
International Freight | Int'l rail freight MT | 3.1% | |||
North American Passenger | Passenger-kilometer | 2.5% | |||
International Passenger | Passenger-kilometer | 2.9% | |||
Iron Ore exports MT | (2.9)% | ||||
Mining and Other Industrials | |||||
Coal consump. QBTU | (1.2)% | ||||
Sources: AAR, FTR, Bloomberg, UIC, Global Mining Data, Energy Information Administration, Amtrak, Via Rail, Internal analysis
EXPECTED ANNUAL MARKET GROWTH
(over 5 years)
~2-3%
FREIGHT
~3-4%
TRANSIT
~3-5%
INDUSTRIAL
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How we win in the global
How we create value …
transportation market
1. Customer focus
Deepen & transform global capabilities. Help customers compete and win.
2. Technology
Protect & extend our current market position with world-class technology.
3. Lean culture
Commitment to quality and continuous improvement.
Management compensation aligned to execution
2020
$8.7B
REVENUES
100+ bps
OPERATING MARGIN
EXPANSION
$4.50 to $4.80
ADJUSTED EPS
$900M
CASH FROM OPS
5-YR OUTLOOK
Mid-Single
Digit
ORGANIC SALES CAGR
300+ bps
OPERATING MARGIN
EXPANSION
>10%
EPS CAGR
>90%
CASH FROM OPS
CONVERSION
14
2019 execution & integration reinforces strategic merger rationale
Strategic merger rationale | |
(as communicated at announcement) | |
1 | |
Diversified, global leader in transportation & logistics | |
2 | Electronics & Digital technologies leading to |
autonomous operations | |
3 | Recurring revenue growth in high-margin aftermarket & |
services | |
4 | Highly compelling pro-forma financial profile … |
attractive point in cycle | |
5 | Significant operating synergy potential & tax benefit |
drive value creation | |
6 | |
Strong free cash flow profile enabling rapid | |
de-leveraging |
(a): Please refer to Wabtec's current report on form 8-K dated February 24, 2020
How Wabtec has delivered
$8.2B revenue, global operations, ~60% international revenues, leader in Freight and Transit markets
10+ new products launched in '19 further enabling autonomous operations
~60% of total revenues in aftermarket, providing stability in key markets and close alignment with customer needs
2019 adjusted pro forma revenues of $8.7B(a) , EBITDA of
$1.5B
$30M synergies delivered in 2019, ahead of plan & on-track to deliver $250M before 2022
$1B cash from operations delivered in 2019 yielding net debt to adjusted EBITDA of 2.6x
15
Strong cash generation enabling capital allocation flexibility
Cash | Cash uses |
sources | 5-year outlook |
Excess Cash | |
Available | |
cash |
Cash from
Operations
Dividends
Cap-Ex
Capital allocation approach
- Maintain strong balance sheet for flexible capital deployment
- Continuing to invest in technology innovation to grow leadership position
- Focused on strategic bolt-on M&A that strengthen the core business and are accretive to EPS
- Return cash to shareholders through dividends and opportunistic share repurchase
Balanced capital allocation priorities to maximize shareholder value
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Committed to creating a more sustainable world … focus on corporate social responsibility
Innovating with purpose | Creating a more | Empowering people and |
sustainable world | communities | |
Innovating to serve our customers and | Taking action to reduce our | Driving an inclusive culture grounded in |
environmental impact, while | ||
minimizing our impact on | integrity; investing in the communities | |
strengthening the long-term sustainability | ||
the planet | where our teams live and work | |
of our business | ||
17
Segment Overviews
Rafael Santana
Freight segment
$5.9B
Product mix
2019
Aftermarket | OEM |
60% | |
40% | |
Geography
ROW EMENA
Growth drivers & industry dynamics
• Expanding installed base enabling |
increased recurring revenue |
streams |
• Steady international growth … |
footprint & partnerships are a |
strategic advantage |
• Digital capability is required for |
'19 ADJ PRO FORMA
SALES (1)
~Flat
'20 SALES GROWTH VS.
'19 ADJ PRO FORMA
APAC 11% 13%
6%
Americas
70%
customers to achieve OpEx goals … |
OEM expertise enabling |
competitive advantage |
• Merger driving significant footprint |
rationalization while also capturing |
more content per train |
~100bps
'20 MARGIN EXPANSION
- 2019 GAAP sales of $5.4B, 2019 GAAP EBIT % of 11.8%, 2019 Adjusted Pro- Forma sales of ~$5.9B, 2019 Adjusted Pro-Forma EBIT % of ~18.5%
19
Strategy in action
Strongly positioned to capitalize on global dynamics
Locomotive | Freight car | |||
IB | Age | IB | '20 OEM | |
NORTH | 31K | 19 | 1.6M | 43K |
AMERICA | ||||
APAC | 20K | 17 | 1.2M | 57K |
RUSSIA/ | 40K | 25 | 1.3M | 60K |
CIS/MENAT | ||||
LATAM | 3K | 20 | 151K | 1.5K |
SUB-SAHARAN | 4K | 19 | 145K | 0.5K |
AFRICA | ||||
EUROPE | 7K | 22 | 770K | 12K |
5 year | Looking ahead 2021-2025 |
Outlook | |
− Modernization & new opportunity for service as | |
asset utilization peaks | |
− Strong aftermarket and OEM agreements | |
↓ | − Deliver India locos, grow share in Southeast Asia |
− Strong component opportunities in India | |
↓ | − Continue engine and loco delivery, fleet renewal in |
other CIS, volume to grow due to coal | |
− Leverage RR relationships to grow component share | |
− Renew technology, positive outlook for iron ore & ag. | |
− Stable market for components | |
↔ | − Renew technology, positive volume for iron ore & coal |
− Leverage RR relationships to grow component share | |
− Unfavorable volume dynamics & renewal dependent on | |
technology progress for non-electrified sections | |
− OEM agreement to grow market share |
20
Sources: AAR, SCI, UIC
Strategy in action
Unlocking opportunity for margin expansion across
freight ecosystem
Freight Car
• ~10% of Wabtec content on rail cars
• Opportunity to grow 2X by 2025
Locomotive
- Wabtec holds significant loco IP content
- Opportunity to pull through value on new deliveries, manufacturing & aftermarket sales
21
Strategy in action
Key technologies unlocking $1B revenue
in adjacent markets
Heat Exchangers
- 100+ patents on heat exchanger / cooling system designs
- Industrial applications
Mining | Marine, Power Gen | ||
• | Propulsion system | • | Tier 4 engine: Marine and |
• | Significant partnerships | Power Gen | |
with OEMs | • | Traction motor: Drill Motor |
Wayside Track Management
- Wheel condition monitoring, rail camera, bearing acoustic monitoring
22
Transit segment
Product Mix
2019
Aftermarket
52%OEM
48%
Geography
ROW
9%
APAC 17%
EMENA
Americas 55% 20%
Growth drivers & industry dynamics
-
Dilutive projects are largely behind us
… winning new volume at a better margin - Regulation changes are creating opportunities ... investing in highly- engineered systems that support shift to green
- Steady transit growth across the globe with highlights in India where we're uniquely positioned to win
- Lean culture to deliver significant cost out … sourcing, footprint, quality
$2.8B
'19 SALES
2-5%
'20 SALES GROWTH
~100bps
'20 MARGIN EXPANSION
- 2019 GAAP sales of $2.8B, 2019 GAAP EBIT % of 7.8%, 2019 Adjusted Pro-Forma sales of $2.8B, 2019 Adjusted Pro-Forma EBIT % of ~9.0%
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How we win in Transit profitably
Stabilize the | Drive lean | Capture profitable |
portfolio | culture | growth |
Prudent project selection & | Leverage integration to drive best | Expand in attractive end markets. |
improved risk management. | cost footprint; continuous | Win share of global growth & shift |
improvement mindset. | to green opportunities. | |
Aligning portfolio for continuous profitable growth … path to mid-teen margins
24
Technology
Dominique Malenfant
Technical innovation …
at our core
st
TO MARKET
- Advanced Adhesion controls system to improve traction efficiency for heavy haul freight locomotives
- Train Energy Management for freight application
- AC electric drive system for mining Ultra-Class trucks
- Global Remote Monitoring & Diagnostic solution
- Fully electronic SIL 4 brake system in transit
- Electronic Train Management System ("PTC") in freight
- Tier 4 engine w/o aftertreatment … 3 years ahead of competition
- Metallic 3D printed parts for rail in production
- Battery electric freight locomotive
26
Extending our technology leadership by enabling advances in transportation
Energy | Automation | Additive | Ecosystem | Sustainability |
Management | Technology | Enablement | in Transit | |
Solving our customers largest challenges:
OpEx | Dwell | Reliability | Velocity | Environment |
27
Disrupting the rail industry with battery power
BATTERY-ELECTRIC FREIGHT LOCOMOTIVE
Customer Value Drivers
EnvironmentOpEx
FUEL=$7B+Up to 30%
FUEL AND EMISSIONS SAVINGS | ||||
ANNUAL NAM LOCO FUEL SPEND | ||||
Up to 6,000 | 100% | Up to 45 | ||
MILES ON BATTERY | ||||
KWHr | ||||
BATTERY POWERED | Autonomy | |||
28
Additive is disrupting traditional manufacturing
FUEL COOLING NOZZLE
Up to 90%↓
LEAD TIME
Up to 75%↓
INVENTORY
Customer Value Drivers
OpEx Reliability
~$4MILLION
'19 IMPACT
>2x
LIFE EXTENSION
1,250 prototype parts +
12 production part types … target is to grow production
circulation >25,000 by 2025
29
Shift to green … technology unlocking
opportunity for customers and the world
METROFLEXX BRAKING SYSTEM
Up to 15%↓
BRAKING DISTANCE
Target to drive 50% increasein market share & margin over next 10 years
Customer Value Drivers
EnvironmentOpEx
95%
RECYCLABILITY
30% ↓
LIFE CYCLE COST
50%↓
WEIGHT
30
Technology as a competitive growth enabler
Capability … delivering innovation
Flexibility … variable workforce
Competitiveness … driving value
Investing ~5% of revenues in technology development
>30%
ENGINEERS IN BEST
COST COUNTRIES
>20%
FLEXIBLE WORKFORCE
CAPACITY
>3%
Y/Y PRODUCTIVITY
31
Freight Services
Pascal Schweitzer
Striving to be railroads' service partner of choice
Rolling stock assets and the right maintenance strategy create significant value
Why locomotive service matters >30yrs >4M 120+
Locomotive life Gallons of fuel consumed Service events
Why freight car service matters
>40yrs 5M+ | ~1M |
Freight car life Global freight cars | Annual Ton mileage |
Significant opportunity over the asset's lifecycle
33
Freight Services solutions for our customers
Modernizations FDL Advantage Smart Shopping Product Lifecycle
Up to 50% | Up to 5% | Up to 40% | ~3% of Sales | ||||||||
Hauling power | Fuel savings | Dwell time | Annual repair investment | ||||||||
Replace 3 units with 2 | Lower emissions & cost | Improve loco downtime | Optimize lifecycle cost | ||||||||
>500 units in operation | 10k+ engines in operation | Up to 4% availability | ~23k locomotives globally | ||||||||
Up to 10k locomotive | Up to 500 overhauls/year | ~3% reduction in repeat | Up to 20% increase in | ||||||||
market potential | over the next 10 years | locomotive failures | useful life of parts | ||||||||
What: Asset life extension | What: Performance upgrade | What: Suite of products to | What: Performance | ||||||||
via comprehensive upgrades | How: Common rail system | manage shop logistics | upgrades and new products | ||||||||
How: Modular scope defined | and new controls during | How: Digitally connect all | How: Global product | ||||||||
with every customer | engine overhaul | assets across the network | remanufacturing capabilities |
34
A well-positioned, technologically advanced locomotive fleet
~23k | 40+ | 200+ |
INSTALLED BASE | COUNTRIES | CUSTOMERS |
Technology differentiators
1. Engine fuel efficiency
Up to 6% more efficient engine driving ~18k gallons of fuel savings per year-a)
2. Hauling power
14% more tonnage with advance adhesion/individual axle control enabling >1,000 additional cars/loco
3. Trip Optimizer
~12k installed saving over 250k gallons of fuel per day around the globe
INSTALLED BASE DISTRIBUTION | ||||
T4 | DC EVO AC4400 | D9 | D7 | |
13 Yrs | Modernizations and upgrades | |||
average age | ||||
1st overhaul | 2nd overhaul |
# of UNITS
AGE OF FLEET
The backbone of freight railroad operations globally
(a - Source: Southwest Research Institute Locomotive Fuel Consumption Testing
35
Unique franchise with a proven track record of growth
6% annual revenue growth over the last decade
$2.2B $12B
2019 ADJ PRO- | BACKLOG |
FORMA SALES-a) | |
~80% ~90%
Revenues under | OEM parts with |
contract | Wabtec IP |
~80% | 500+ |
Fleet under digital | Performance |
monitoring | upgrades in catalog |
A global, customer focused team
- 100+ customer locations with Wabtec presence
- Remanufacturing at 20+ global locations
- ~30% of installed base outside of North America
(a - $2.0B 2019 GAAP revenues adjusted for full-year financials
36
Long-term fundamentals to deliver growth
Market Drivers
Fleet lifecycle
+ Favorable fleet age profile … prioritized asset dispatch
- Higher locomotive utilization … accelerating maintenance across the board
Fleet performance
- Increased demand for availability, reliability, fuel performance … mods and upgrade opportunities
- Strategic partnerships for value
Fleet size
+ International deliveries, units off warranty
- NAM Class I parking
- Railroad focus on op ratios, short term impact to maintenance costs
Our Strategy
Capture entitlement
- Maximize utilization
- Track loco performance over lifecycle
- Leverage global service platform and infrastructure
Drive outcomes
- Partner on RR fleet lifecycle strategy
- Roll-outnew offerings at scale
- Revitalize aging assets via Mods
Optimize lifecycle cost
- Rigorous tools to analyze cost structure
- Dedicated engineering organization focused on lifecycle cost management
- LEAN and Quality at heart of business
37
Strategy in action
Wabtec Freight Services … aligned to PSR
Remote Monitoring
50% early failure prediction
Performance upgrades
5% fuel savings, 50% in software cycle time
Smart Shopping
40% in dwell time
Technical support
500+ certified technical advisors
Global logistics
Guaranteed parts availability and performance
Overhaul solutions
Global remanufacturing capabilities
World Class Reliability
50% in failures per loco after modernization
38
Key takeaways
1. Technology-driven service franchise delivering through the cycles
2. Leveraging fleet dynamics and railroad demand for increased performance to drive mid-single digit annual growth over the next five years
3. Strong cost and growth synergies with Wabtec service business; leveraging existing platforms to grow penetration
39
Digital Electronics
Peter Thomas & Bob Bourg
Digital Electronics
$0.7B
Revenue by Segment
Industrial
Transit
Freight
Geography
Other
LATAM
North
America
APAC
Industry dynamics & growth drivers
- Managing a tough cycle globally … overall '19 volume down (4%) in North America
-
NA Railroads shift focus to
Operations … Precision Scheduled
Railroading (PSR) - Automation opens next generation of productivity … and growth
- Opportunity to take capabilities to key global markets
'19 SALES
$1.1B
BACKLOG
>10%
EXPECTED TOP-LINE
GROWTH
41
Customer outcomes that matter, in the context of PSR
SafetyAsset Performance Network Performance Supply Chain Visibility
~22k | ~12k | 250 | 14 | |||
On-board PTC systems | Trip Optimizer units | Days advanced visibility | ||||
~65k | ~20k | Dispatch desks in service | 1 | |||
Track miles with PTC | LOCOTROL Systems | ~100k | Information source | |||
~9k | ~10k | 10% | ||||
Track miles under control | ||||||
Collision avoidance systems | GoLINC Edge devices | Productivity improvement | ||||
Safety | Fuel savings | Dwell | Improved customer | |||
Communications | Asset utilization | Velocity | service | |||
Installed base foundation of automation
42
How we win with our customers
Freight | >$15B | |
ADDRESSABLE OPEX | ||
Transit | 3x | |
EST. DEMAND FOR PASSENGER | ||
TRANSPORT BY 2050 | ||
Mining | $5B | |
1% IMPROVEMENT IN | ||
OP COSTS | ||
Shipper / | 14 | |
Ports | DAYS OF ADVANCED | |
VISIBILITY W/DATA | ||
INTEGRATION |
1. Growth on existing portfolio
2. Enhancements and upgrades
3. Path to automation
4. Market expansion
43
Road to rail … harnessing innovation to drive productivity
1%
Shift of trucking | 75% | |
revenue to rail | 4X | |
Top-line growth | ||
of >10% for | Moving freight by | |
rail instead of | ||
railroads | Rail is 4 times | |
more fuel | truck lowers | |
efficient than | greenhouse gas | |
trucks | emissions by 75% |
1980 | 2018 | 2028 |
1 gallon | 1 gallon | 1 gallon |
1 ton | 1 ton | 1 ton |
235 2x | 473 2x | 900+ |
miles | miles | miles |
Sources: Federal Railroad Administration (June, 2018); Association of American Railroads (July, 2019)
Partnering with customers … improving freight throughput in 10 years what took 40 years
44
Enabling productivity and efficiency for customers
Class I Operating Expense
Market Opportunity for Wabtec
Fuel Efficiency … $600M
$70B+
$60B+
Safety … $2B
Signaling, Wayside, Communication
Trip Optimizer, Smart Horsepower per Ton (HPT), Locotrol, Zero-to-Zero
Network Optimization… $500M
Yard Planner, Smart
Intermodal,
Movement Planner
↓
20102019Future
Productivity | |
… $2B | Asset Performance |
Autonomous, | |
Road Remote | Management… $500M |
Control Locomotive | EdgeLINC, Expert on Alert, |
Condition Monitoring |
45
Automation building blocks unlock value & capability
FULL AUTOMATION
Moving block . Dispatch visibility
Wayside sensor integration
DE-SKILLED ENGINEER
Vital standalone PTC . High-bandwidth
communication . Yard automation
SINGLE PERSON CREW
Paperless Cab . Road RCL . Movement Planner
ATTENDED AUTOMATION
PTC + Trip Optimizer . Movement Planner
Zero-to-Zero . SmartHPT
TECHNOLOGY FOUNDATION
PTC . Trip Optimizer . Distributed Power
25%
FUEL EFFICIENCY IMPROVEMENT
25%
REDUCTION IN TRAIN DELAYS
50%
POTENTIAL PRODUCTIVITY SAVINGS
75%
REDUCTION IN ACCIDENTS DUE TO HUMAN ERRORS
Double digit revenue growth by unlocking ~$6B+ in opportunity
*Estimation for North American Class 1 railroads
46
Global Operations
Alicia Hammersmith
Global cost-competitive manufacturing strategy
BUILDING FLEXIBILITY
- Combined manufacturing enabling operations synergies
- Optimize footprint for capability to serve multiple product lines … simplify supply chain and asset base
- Announced upcoming exit of 6% of property portfolio in 2019
- Actioning additional 9% of footprint in 2020
~$70MM
INSOURCED MATERIAL FROM
COMBINED OPERATIONS
ACCELERATING LEAN
Demonstrated track record of margin expansion:
- 5% manufacturing cost savings productivity
- Integrated systems and MRP
- Disruptive manufacturing … additive, condition-based maintenance, etc.
- Best in class safety record
>90%
ON-TIME DELIVERY
TO CUSTOMERS
Evolving to lighter asset model
TRANSFORMATION
- Proven local capability in best cost countries for key customers (India, Brazil, Kazakhstan, Czech Republic, Macedonia)
- Strong local partnerships for in- country content (South Africa, Turkey, Ukraine, Egypt)
- Material and transportation cost reduction … targeting 35% content sourced from best cost countries
>25%
SITES IN BEST COST
COUNTRIES
48
Lean in action
Lean operations and multi-modal
flexibility … transforming Fort Worth
2x | (15)% | 50+ |
CAPACITY EXPANSION | LOWER MANUFACTURING | LEAN EXPERT |
W/O ADD'L FOOTPRINT | ASSEMBLY HOURS | KAIZEN EVENTS |
- of unique models
1 | 3 | 3 | 12 | 12+ |
50% 40% 60%
100% 100%
50% 60% 40%
FromTo
A single model, new | 12 different models | |||||||
2013 | 2016 | 2017 | 2019 | 2020F | ||||
locomotive only shop | with modernization mix | |||||||
New locos | Total Ft. Worth production mix | |||||||
Modernizations
49
Lean in action
First mixed moving line in industry … | 10% | |||
transforming Brazil site | ||||
WORKING CAPITAL IMPROVEMENT | ||||
From | To | |||
>13,000 ft2 | ||||
batch production push system | single piece flow pull system | |||
Static line… | Mixed moving line... |
AREA SAVINGS
3
SITES CONSOLIDATED
0
RECORDABLE INJURIES
50
Lean in action
Machine connectivity in Grove City
400+ 60%+
70%+
CONNECTED | |
MACHINES ACROSS | 30%+ |
13 PLANTS |
improvement in Safety
improvement in Quality
improvement in Lead Time
25%
INCREASE IN EFFICIENCY
51
Lean in action
Electronics Manufacturing COE …
sourcing and rationalizing electronic builds
From | To |
Product line focused … rugged | Insourcing … integrating 3rd party |
electronic manufacturing | builds into COE system |
~30%
LABOR SAVINGS
OPPORTUNITY
5+
ADDITIONAL PRODUCT
LINES INSOURCED
>75%
FACTORY UTILIZATION
(over last 5 years)
30 DAYS
CUSTOMER LEAD TIME REDUCTION
52
Scalable model driving continuous improvement
Accelerating Lean
Building flexibility
Driving transformation
OPERATIONAL TARGETS
5% ↓
MANUFACTURING
COST PRODUCTIVITY
15% ↓
MANUFACTURING
FOOTPRINT
3% ↓
MATERIAL COST
DEFLATION
Lean manufacturing delivering operational efficiency
53
Transit Segment
Lilian Leroux
Focused on driving safety, efficiency and passenger comfort
Business
- $3.5B in backlog
- Sales up 6%
- $92B addressable new and Services rolling stock market
- > 60 service centers
#1 or #2
IN KEY PRODUCT CATEGORIES
(ACROSS GLOBAL ACCESSIBLE MARKETS)
Customers
- > 900 customers
- Partner with train manufacturers on strategic projects
- Drive outcomes for transit operators via aftermarket
Products
- Largest Transit portfolio in the industry
- >75% of portfolio focused on 5 core product areas
- Equipment with high engineering added value
23
NEW PRODUCTS
INTRODUCED TO MARKET IN 2019
55
Transit reset … turnaround underway
Stabilize the portfolio
Prudent project selection & improved risk
management.
Drive lean culture
Leverage integration to drive best cost footprint;
continuous improvement mindset.
Capture profitable growth
Expand in attractive end markets. Win share of global growth & shift to green opportunities.
>100bps margin improvement in 2020
Turnaround scorecard
2019 | 2020 | |
ACTUAL | GOAL | |
COST OF | ||
POOR | (6%) | (5%)-(10%) |
QUALITY |
ON-TIME | +3 PTS | +2-3 PTS |
DELIVERY | ||
MATERIAL 2% >2%
DEFLATION
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Stabilizing portfolio & driving lean culture
Prudent project selection & improved risk management
- Reinforced project selection governance, 75% of UK refurbishment projects completed
- Stronger supply chain and project management capabilities, new leaders appointed
Leverage integration to drive best cost footprint; continuous lean improvement
- Increasing to >30% manufacturing and engineering into best cost countries
- Optimize fixed cost structure to deliver year-over-year OpEx savings
Strategy in action
PIS | $3.5B BACKLOG |
OTHER | |
HVAC | Significant reduction |
DOORS | |
BRAKES | of refurbishment |
backlog, in favor of | |
SERVICES | more attractive |
REFURBISHMENT | segments |
Design and validation of new couplers for Transit to significantly improve comfort on board of coaches
Leveraging Wabtec India's Technology & Engineering Center
57
Strategy in action: best cost footprint & lean
Transforming Transit Brakes operations
- Driving manufacturing into best cost countries
- Strong make or buy actions to improve material cost
- Total product cost reduction initiative
- Digitizing operations
- Optimizing fixed cost structure to deliver OpEx savings
2019 achievements: | ||
~45% | ~(15)% | >85% |
HOURS IN | COST OF POOR QUALITY | ON-TIME DELIVERY |
BEST COST COUNTRIES | OVER 2 YEARS | +8PT |
Continuous improvement and focus on best cost countries
58
Growing the portfolio in attractive markets
10-15% growth in profitable end markets
GROWTH THROUGH BROADER
AFTERMARKET OFFERING
- Condition based maintenance initiative … 5 projects started in 2019
- Deployment of digital spare part catalogue
- Integration of advanced analytics and 3D printing
INCREASED DEMAND FOR MODERN EQUIPMENT FOR EXISTING TRAIN
- Growth of Passenger Information Systems
- In need of technical upgrade of all Wabtec onboard equipment
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Expanding product offerings to support the Shift to Green
Capture profitable, growing demand & shift to green opportunities
Market | Our |
drivers | response |
Shift to green: | Energy management |
New global trend for Transit | |
- In political agenda and funding
decisions | Weight reduction |
Economic factors | Dust reduction |
• GDP, demography, urbanization | |
Technology | Charging solutions |
- Energy efficiency, lightweight,
automatization, digitization | CO2 reduction |
Strategy in action
(100kg) per car
with newest MetroFlexx brake control & brake station
Up to 10x
fewer micro-particles for friction braking
Up to 30%
energy savings in HVAC
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Russia / CIS / MENAT
Gokhan Bayhan
Wabtec in Russia / CIS / MENAT today
3-4% Freight Growth | ~$3.5B | |
WITH AGING FLEET OF 40K | '20 OPENING BACKLOG | |
LOCOMOTIVES & 1.3M RAILCARS | ||
~300 | >770K ft2 | |
EMPLOYEES ACROSS REGION | OPERATIONAL FOOTPRINT | |
Double digit revenue growth through the long-term plan
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Leveraging local presence to overcome high barriers to entry
LOCOMOTIVES IN OPERATION | |
Largest diesel | 1,500+ locos in operation |
locomotive market | |
#2 outside of North | |
America | |
Wabtec Advantage | SERVICE |
50+% fleet under long term | |
State-of-the-art technology | |
service agreements |
Localization & partnership
Service/supply chain infrastructure | ENGINES IN OPERATION |
Financing solutions | 300+ engines in operation on |
other OE locos | |
8X fleet growth since 2005 |
63
Strategy in action
Fueling Egypt's rail
infrastructure
100 fuel-efficient new locomotives
80 locomotive rehabs
15-year sole source parts and technical support agreement for 180 locos (new and current fleet)
International / complex full project financing package
ENR goal to increase freight market
share from 1% → 10% … creating
demand for 200-300 additional locos
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Leverage Wabtec advantage to expand portfolio
Local Presence
Utilize established operational infrastructure and deep relationship with customers, build partners & stake holder
Customer Solutions
Expanded product and services portfolio offering customers integrated & complete solutions
Team
Alignment & cooperation of key account managers with business units… single face
to the customer
Passenger coaches & metro
Brake systems, friction, HVAC and doors
Electric locomotives
Brake systems, HVAC, pantograph
Freight wagons
Bogie frames, brake systems
4X total market opportunity post merger
Confidential & Proprietary
65
India
Sujatha Narayan
Building a $1B* enterprise in India over 5 years
#1
ROLLING STOCK & RAIL
EQUIPMENT COMPANY IN INDIA
$450M+ | ~2,750 |
RAPID GROWTH FROM LOCO, | EMPLOYEES ACROSS REGION |
TRANSIT BRAKES, METRO |
~1Mft2 | ~1,200 |
OPERATIONAL FOOTPRINT | WABTEC INDIA ENGINEERING |
* Includes intercompany sales
67
Wabtec's leading advantage
MARKET | TALENT | COSTS |
+ +
68
Leverage the market
4th
Largest rail network in the world
68,000 km
Rail route
22,700
Trains running every day
23M
Passengers per day
3M Tons
Freight per day
TRANSIT & FREIGHT
Protect the profitable core
- Transit brakes
- IR locomotive project
Build new business
- Drive aftermarket service growth
- Introduce new products and services
- Compete in metro products
DIGITAL ELECTRONICS
- Business development & concept selling
- Wabtec advantage
- Current RM&D capability
- Global Engineering center in India
- Extensive global portfolio
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Leverage the talent
1.5M | India produces more | ||
engineering grads | |||
# Engineers in India | than US + Europe | ||
1 in 10 | India has | ||
~90,000+ analytics | |||
Analytics professionals | professionals | ||
worldwide from India | |||
~2,000+ | Working in the B2B | ||
700+ work with | |||
space, out of which | |||
Startups | deep technology | ||
WABTEC INDIA TECHNOLOGY &
ENGINEERING CENTER
- 4 groups / sites → 1 team
- ~1,200 Engineering & IT team
- Maximize synergy & utilization
GLOBAL COE
- World-classcompetitiveness
- Established global design teams for Freight, Transit and signaling
- Develop product/solution building capability
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Leverage the cost
Lower operational costs
Commodity, overhead & labor costs
Supply ecosystem
Entrenched automotive and railway suppliers
India financial reforms
Make in India
Drive global sourcing to drive Wabtec profitability
World-class factories through Industry 4.0
A global hub for manufacturing of Transit & Freight solutions
71
Financials
Patrick Dugan
What you've heard
Delivering results through the cycles via world-classtechnology and innovation while leveraging significant installed base
Focused on continuous operational improvement and margin expansion
Lean operations driving strong cash flow with disciplined capital allocation
Building a stronger and better Wabtec with a
purpose-focused culture of accountability
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2019 adjusted pro-forma results(1)
($ in billions, except per share amounts)
FY19 | FY19 non | Policy | Partial year | Recurring | FY19 adj. | FY20 adj. | |
GAAP(2) | GAAP | harmonization(3) | pro-forma(4) | PPA(5) | pro-forma | guidance | |
Revenue | $8.2 | $8.3 | $(0.1) | $0.5 | - | $8.7 | $8.7 |
Income from | $0.7 | $1.2 | $(0.1) | $(0.1) | $0.3 | $1.3 | $1.4 |
Operations | |||||||
EBITDA | $1.1 | $1.6 | $(0.1) | $(0.0) | - | $1.5 | $1.6 |
Cash from | $1.0 | $1.1 | - | $(0.3) | - | $0.8 | $0.9 |
Operations | |||||||
EPS (177M shares) | $1.84 | $4.17 | ($0.39) | $(0.37) | $1.19 | $4.60 | N/A |
EPS (192M shares) | $1.70 | $3.86 | ($0.36) | $(0.34) | $1.10 | $4.26 | $4.50-$4.80 |
- FY 2019 adjusted pro forma financial results give effect to the GE Transportation merger as if it had occurred on January 1, 2019. The FY 2019 pro forma financial results are not presented in accordance with Article 11 of Regulation S-X, and are presented here for illustrative purposes only and are not indicative of the results of operations that would have actually occurred had the GE Transportation merger occurred on January 1, 2019.
- The GE Transportation merger closed on February 25, 2019. Accordingly, Wabtec's FY 2019 results do not include results attributable to GE Transportation for January and February of 2019.
(3) Represents the impact of non-cash accounting policy harmonization, which is included in GAAP results; policy harmonization will no longer be treated as a non-GAAP addback in 2020 results.
(4) Represents 2 months of GE Transportation performance, interest expense, additional amortization and PP&E expenses, and impact from intercompany sales
(5) This represents intangible amortization amounts which will be excluded from non-GAAP EPS calculations.
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2020 outlook
'19 | '19 Adj. | '20 Adj. | |
GAAP | Pro-Forma | Guidance | |
Sales | $8.2B | $8.7B | ~$8.7B |
EBIT % | 8% | 15% | ~16% |
EPS | $1.84 | $4.26 | ~$4.50 to |
~$4.80 | |||
Cash from | $1.1B | $0.8B | ~$0.9B |
Ops | |||
What we are expecting
Sales
- Softening NAM Freight (loco, freight car, services)
- Moderate growth in mods, int'l services, & Transit
- Digital Electronics growth
EBIT %
- >$150 cumulative net synergies ($120 year over year impact), primarily in Freight
- Negative mix due to lower Freight & higher Transit
- Lean improvements
Cash from Ops
- ~$100 outflow for prior year 1x charges
- Working capital drag due to timing
- GE Tax payment benefit
Delivering in challenging environment
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Diversified & global sales portfolio
Freight
'19 sales | '19 sales | |
GAAP | Adj. pro-forma | '20 outlook |
Equipment | $1.7B | $1.9B | NAM carload volume flat to down … NAM | |
loco volume partially offset by international | ||||
Components | $1.1B | $1.1B | Lower freight car build @ ~40K | |
Services | $2.0B | $2.2B | ↔ | Loco parkings remain @ '19 ending levels … |
NAM offset by int'l & slight mods growth | ||||
Digital Electronics | $0.7B | $0.7B | Growing product offerings aligned to | |
customer needs | ||||
Transit
Transit OE | $1.3B | $1.3B | Low single digits growth |
Transit AM | $1.5B | $1.5B | Low single digits growth |
$8.2B $8.7B
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Significant synergy opportunities
SG&A | • | Shared services |
• | Corporate costs | |
• | LCC optimization | |
Facility | • Exit co-located facilities | |
• | Office consolidations | |
consolidation | • | Mfg. footprint |
optimization | ||
Sourcing | • | MRO spend |
• | Direct material spend | |
• | Indirect spend | |
IT savings | • Exit GE shared services | |
• | System rationalization | |
• | Network standardization | |
Revenue | • | Digital/Electronics |
• | Sales cross-selling | |
Net cumulative synergy $s
$250M
$150M
$30M
2019 | 2020 | BEFORE 2022 |
On-track to achieve $250MM run-rate synergies before 2022
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Continuing to drive margin expansion
Adjusted EBIT margins
~30 bps | ~16% | |||||
15% | ~70 bps | Freight | ||||
+ Synergies | ||||||
+ Lean productivity | ~19.5% | |||||
+ Synergies | + Volume growth | |||||
Freight | + Lean productivity | Transit | ||||
+ Int'l services & mods | ||||||
~18.5% | ||||||
+ Digital Electronics | ~10.0% | |||||
− NAM Freight (locos,
Transit | components, services) |
~9.0% |
2019 | FREIGHT | TRANSIT | 2020 |
ADJ PRO-FORMA | ADJ GUIDANCE |
Key drivers
- Proven ability to achieve synergies
- Culturally engrained lean efforts
- $22B backlog
- Significant installed base with ~60% aftermarket revenues
- Globally diverse portfolio
- Pockets of growth offsetting NAM freight slowdown
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Cash tax benefit driven by transaction
~$150M | Tax step-up associated with the transaction drives average |
annual cash tax benefits of ~$150M for the next 15 years | |
ANNUAL BENEFIT |
~$470M | First $470M of gross cash tax benefits ($440 NPV) to be paid to |
GE by Wabtec (expected to be realized during first 3-4 years) | |
BENEFIT TO BE | |
PAID TO GE | |
~$1.1B | value of ~$1.1B) |
Remaining cash tax benefits accrue to Wabtec (net present | |
NPV BENEFIT TO | |
WABTEC |
79
Continuing to drive strong cash generation
Cash from operations
$1.0B
~$0.9B
- EBIT growth
-
Lower interest ↔ GE tax benefit − Higher tax rate
− Working capital timing − 2019 1x charges
2019 | 2020 |
Committed to goal of >90% cash conversion
Key drivers
- EBIT growth driven by synergy execution, lean actions
- Lower interest expense on lower debt
- GE Tax benefit ~flat versus '19; effective tax rate slightly up
-
Working capital pressure due to timing
… significant focus area to improve - Cash outflows of ~$100M driven by payments of '19 1x charges treated as non-GAAP adjustments
80
Capital allocation strategy
Invest organically
Consistent R&D and CapEx investments in new products, aftermarket & recurring revenue streams, & digitization
~5% | ~2% |
TECHNOLOGY | CAPEX |
% SALES | % SALES |
Grow through acquisitions
Strategic bolt-on acquisitions that enhance growth strategy … grow aftermarket, product offerings, and new markets
> cost of capital
TARGET RETURN ON
INVESTMENT
Maintain stable dividend policy … recently announced share repurchase authorization to be used
Return capital opportunistically when returns exceed other alternatives, providing a return exceeding cost of
capital
Excess cash
RETURN TO SHAREHOLDERS
81
5-year financial plan
Sales growth
Strong recurring revenue base & deep partnerships in long- | Mid-single |
cycle business enabling growth through the cycle | digits |
ORGANIC GROWTH
EBIT margin improvement
Significant synergy opportunities driven by business | 300+ bps |
combination; Transit stabilizing & delivering accretive growth | MARGIN EXPANSION OVER |
NEXT 5 YEARS |
Cash generation | Proven ability to execute strong working capital | >90% |
management; deal structure unlocking ~15 year tax benefit | CASH FLOW | |
CONVERSION | ||
Focused capital allocation
Invest in the company; free up capital for strategic M&A and | >10% |
share buy-back | EPS CAGR |
Long-term value creation will average double-digit EPS growth
82
Key takeaways
- Portfolio is uniquely positioned to deliver strong results
- Leading technologies positioning Wabtec to build further momentum on its track record with customers
- Lean transformation and global capabilities are making Wabtec stronger and enabling significant synergies and margin expansion
- Strong cash generation enabling capital deployment strategy to grow shareholder value
- Confident in long-term business fundamentals and ability to execute in dynamic environment
Positioned to outperform
83
Speaker Biographies
Rafael Santana
President & CEO
Rafael Santana is President and CEO of Wabtec where he brings roughly 25 years of commercial, product management and executive leadership experience to this post, including more than 10 years in the transportation industry. He has a proven track record of transforming businesses, while delivering top- and bottom-line growth.
Most recently, he served as President and CEO of GE Transportation, a unit of General
Electric company, where he significantly expanded the company's regional footprint and
built strong overhaul and modernization capabilities and backlog through multi-year programs. Prior to that role, he was president & CEO of GE in Latin America, where he helped transform the market into one of GE's largest and fastest-growing regions. A respected global and business executive, Santana also served as president and CEO of the Turbomachinery Solutions Business of GE Oil & Gas, where he drove significant margin improvement and growth in a contracting marketplace. Prior to joining GE in 2000, Santana worked for six years at ExxonMobil and British American Tobacco.
A native of Brazil, Santana has a degree in Engineering from the Universidade Federal de Minas Gerais in Brazil. He currently serves on Wabtec's Board of Directors.
86
Gokhan Bayhan
Regional General Manager − Russia/CIS
Gokhan Bayhan is General Manager for Wabtec's Russia/CIS, Europe, M. East and N.
Africa region. Prior to the merger of GE Transportation and Wabtec, Bayhan joined GE in 1997 and held multiple roles including Regional Sales Manager Russia, CIS & Turkey, Global Locomotive Strategic Marketing Manager, and Strategic Marketing Leader, Pricing.
On December 2009 he was named the General Manager of Russia, CIS and South East Europe and on December 2012 his region was expanded to cover Europe, Middle East and Europe. After the February 2019 Wabtec Corporation acquisition of GE Transportation, he was named the regional leader for the same territory for Wabtec.
Bayhan holds a Bachelors of Science in Electrical Engineering from Gannon University, and MBA in Finance from the Katz School of Business at the University of Pittsburgh, and a Masters of Science in Electrical Engineering from Gannon University.
87
Bob Bourg
Vice President for Core Electronics & Data Analytics
Bob Bourg is Vice President for Core Electronics & Data Analytics at Wabtec Corporation. He has P&L responsibility for a portfolio of products and systems including locomotive electronics, braking systems, event recorders, IoT platforms, and digital solutions for the mining industry.
In prior positions with Wabtec, Bourg led strategy & growth initiatives, managed multiple product and services business units, and led efforts for the design and implementation of Positive Train Control systems mandated by the Rail Safety Improvement Act of 2008. Before joining Wabtec, Bourg worked in the instrumentation and controls industry, and he began his career in the U.S. Navy where he helped develop microprocessor-based equipment used in naval nuclear instrumentation and control applications.
Bourg holds a BSE degree in Electrical Engineering from Duke University and an MS degree in Computer Science from George Washington University.
88
Patrick D. Dugan
Chief Financial Officer & Executive Vice President
Patrick Dugan is Chief Financial Officer (CFO) and Executive Vice President At Wabtec, where he is responsible for all aspects of Investor Relations, Accounting, Tax and Finance, and Information Technology.
Dugan joined Wabtec in 2003, and has been a key member of the management team focused on delivering growth through new product development, international expansion and acquisitions. As CFO, Wabtec has grown from ~$2.5B in revenues to nearly ~$9B in revenues, driven largely by the strategic acquisitions of Faiveley Transport and GE Transportation. During those critical combinations, Dugan was instrumental in executing the strategy and business structure, debt and equity financing, as well as integration of these investments. Prior to this role, he was Wabtec's Corporate Controller and Vice President of Finance.
Before joining the company, Dugan was Vice President and CFO at CWI International, Inc., where he helped transform a local chemical operations into a supplier of advanced oilfield technologies, through M&A, product development and international expansion. He also helped guide the start up to acquisition by Weatherford International.
Dugan began his career with PWC providing business assurance and advisory services, serving middle market growth companies focused on transformational transactions including M&A, recapitalizations and initial public offerings.
He holds an MBA from the Joseph M. Katz Graduate School of Business at the University of
Pittsburgh, a Bachelor of Science in Accounting from The Pennsylvania State University, and is a
Certified Public Accountant.
89
Alicia Hammersmith
VP Operations, Transit
Alicia Hammersmith is Vice President of Operations for the Transit segment. She brings 29 years of manufacturing operations expertise spanning three large industrial, technically advanced segments of Aviation, Transportation and Oil & Gas. Hammersmith is skilled in acquisitions, divestitures, consolidations, start-ups, system implementations and tech transfers.
Most recently, she was the Materials Leader for GE Aviation responsible for $4.5 billion in inventory across 80+ sites leading demand forecasting, master scheduling, planning, configuration management, fulfillment, distribution and logistics for new equipment and services. Prior to that role, she was the Global Operations Leader for GE Oil & Gas on four-year assignment in Germany managing 10 acquisition sites in five countries in addition to providing operational oversight for European sales and service locations. Hammersmith has eight years in the transportation industry in operations and materials.
Hammersmith has a degree in Engineering from the University of Pittsburgh and a
Masters in Business from Xavier University.
90
Kristine Kubacki
VP, Investor Relations
Kristine Kubacki is Vice President of Investor Relations. She brings 14 years of experience as a sell-side analyst covering industrials.
Kubacki previously served as executive director and senior analyst for the transportation, logistics and equipment sector at Mizuho Securities USA. Prior to this role, she was vice president of market strategy for Wells Fargo's commercial vehicle group, as well as director of equity research for the global industrial equipment industry at CLSA. Kubacki spent nearly nine years covering the industrial sector at Avondale, and held analyst roles at A.G. Edwards, as well as operations management, process design and supply chain management positions at Procter and Gamble.
Kubacki earned her MBA from Washington University, Bachelor of Science degree in chemical engineering from Washington University, and Bachelor of Science in mathematics from Webster University. Kubacki is also a CFA charterholder.
91
Lilian Leroux
President, Transit
Lilian Leroux has been the president of Wabtec's Transit business since 2019 and has spent most of his 25 years career in a variety of leadership, commercial and project management roles across the railway sector. After various positions within industrial and railway companies such as the French national railway operator SNCF, Leroux joined Faiveley Transport in 2001 as Project Manager and then Key Account Manager. From 2004 to 2009, he worked successively as Faiveley Transport Managing Director in Tamworth (U.K.) and then U.K. Managing Director. Following the acquisition of SAB WABCO, he took full P&L responsibility of the region.
Leroux was subsequently appointed Services President, a division supporting rail operators and maintainers with the maintenance and optimization operations of original equipment throughout their lifespan. In 2014, Leroux was appointed Brakes & Safety Group President where he was responsible for all Transit Brakes, Couplers, and Friction Product Lines worldwide. He was instrumental in driving growth and successful integration of the two compagnies' brakes product portfolios when Faiveley Transport was acquired by Wabtec in 2016.
Lilian has worked and lived in France, UK, Italy & Germany. He holds the Science Degree in Engineering from INSA Lyon, a leading engineering school in France, and is graduate of INSEAD.
92
Dominique Malenfant
Global Technology Officer
Dominique Malenfant is the Global Technology Officer & Senior Vice President Engineering for Wabtec. In this role, he is responsible for the overall global technology strategy and engineering organization for the company.
Malenfant previously served as the Vice president Global Technology & Chief Technology
Officer for GE Transportation for 4.5 years where he lead GE Transportation's overall
global technology strategy. Prior to GET, he served as Vice President of Product and Engineering for the Transport Propulsion and Control Business at Bombardier Transport, overseeing 1,200 professionals across eight different countries. Through his 24 with Bombardier, he managed Bombardier Transport's North American division where he was responsible for product management, engineering and supply management. He also led the Center of Expertise R&D group, and has experience in plant management, engineering quality assurance, systems engineering and project management.
Malenfant graduated from Laval University in Quebec City with a bachelor's degree in
Electrical Engineering.
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Sujatha Narayan
Regional General Manager − India
Sujatha Narayan joined Wabtec in August 2017 and in her 2.5 years as Managing Director of Transit business in India, she has led the company through a period of unprecedented profitable growth with a passionate focus on customer satisfaction, operational efficiency, compliance, profitability and employee well-being. In 2019, under
her leadership, the Wabtec Transit business was certified as a "Great Place to Work" by Great Place To Work Institute
Prior to her current role, Naryan was the Vice President & General Manager leading the Commercial Solutions Business at 3M India Limited. In the United States, Narayan worked for Rogers Corporation managing R&D & Commercialization of new products in the electronics, industrial and consumer markets.
Narayan holds a Masters & PhD in Polymer Science & Engineering from Georgia Institute of Technology, USA and BTech Degree from Indian Institute of Technology, Delhi. She originally hails from Chennai, India.
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Pascal Schweitzer
Group President, Freight Services
Pascal Schweitzer is Group President, Wabtec's Freight Services business, which helps customers maximize the value of their existing assets, over their entire lifecycle, through innovative technologies and business models. In this role, Schweitzer is responsible for improving critical customer outcomes in the areas of product reliability, asset use, velocity, fuel consumption, operating expenses and railcar dwell time. His organization oversees maintenance agreements for part sales, asset maintenance, global remanufacturing, fulfillment and the development of advanced software and analytics.
Before the merger with Wabtec, Schweitzer served as GE Transportation's Vice President,
Global Services Organization and prior to that was GE Power's Services Leader for Europe,
where he was responsible for developing and delivering a regional services strategy, while leading the company's transformation following the acquisition of Alstom. Prior to this, he ran the Gas Turbine Service business for Alstom globally. Before joining Alstom, he was the strategy manager in charge of strategy and IPO projects at Rexel in Paris.
Schweitzer received a master's degree with specialization in finance from the HEC
Business School in Paris.
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Peter Thomas
Chief Commercial Officer, Digital Electronics - Americas
Peter Thomas is the Chief Commercial Officer in the Americas for Wabtec's Digital
Electronics business where he and his team are charged with developing a winning commercial strategy and driving customer focused, outcome oriented commercialization efforts for the company's suite of software and digital technologies to the rail, port and shipper segments.
In his previous role, Thomas was the General Manager for GE Transportation's Optimization Solutions business and President of RMI. He joined GE Transportation in 2004 as the Marketing Leader for Global Signaling. In 2005, he was promoted to the role of International Sales Leader for Global Signaling and Global Rail Operations and was based in Florence, Italy. He subsequently served as General Manager of Sales for the Middle East /Africa region and was based in Dubai, UAE before being named Chief Marketing Officer for GE Transportation in 2009.
Prior to joining GE Transportation, Thomas spent eight years with the GE Fanuc Automation business where he held positions of increasing responsibility in sales, marketing, and operational leadership. Peter is a certified Six Sigma Master Blackbelt and holds both a Bachelor of Science in Marketing and a Master of Business Administration from the University of Alabama at Birmingham.
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Appendix
EPS and Non-GAAP Reconciliation
Set forth below is the calculation of the non-GAAP performance measures. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP.
Wabtec Corporation | |||||||||||||||||
Reconciliation of Reported Results to Adjusted Results | |||||||||||||||||
(in millions) | 2019 Full Year Results | ||||||||||||||||
Gross | Operating | Income from | Interest & | Minority | Wabtec | ||||||||||||
Net Sales | Profit | Expenses | Operations | Other Exp | Tax | Net Income | Interest | Net Income | EPS | ||||||||
Reported Results | $ 8,200.0 | $ 2,278.0 | $ | (1,614.9) | $ | 663.1 | $ | (216.3) | $ (120.3) | $ | 326.5 | $ | 0.2 | $ | 326.7 | $ | 1.84 |
Restructuring, Transaction, & Litigation costs | - | 38.3 | 191.5 | 229.8 | 25.0 | (61.6) | 193.2 | - | 193.2 | $ | 1.08 | ||||||
One-time PPA | - | 185.0 | - | 185.0 | - | (44.8) | 140.2 | - | 140.2 | $ | 0.79 | ||||||
Policy Harmonization | 123.0 | 65.6 | 26.0 | 91.6 | - | (22.2) | 69.4 | - | 69.4 | $ | 0.39 | ||||||
Tax on Transaction Costs | - | - | - | - | - | 12.5 | 12.5 | - | 12.5 | $ | 0.07 | ||||||
Adjusted Results | $ 8,323.0 | $ 2,566.9 | $ | (1,397.4) | $ | 1,169.5 | $ | (191.3) | $ (236.4) | $ | 741.8 | $ | 0.2 | $ | 742.0 | $ | 4.17 |
Fully Diluted Shares Outstanding | 177.3 | ||||||||||||||||
98
EBITDA Reconciliation
Set forth below is the calculation of the non-GAAP performance measures. We believe that these measures provide useful supplemental information to assess our operating performance and to evaluate period-to-period comparisons. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Wabtec's reported results prepared in accordance with GAAP.
Wabtec Corporation | ||||||||
2019 Full Year EBITDA Reconciliation | ||||||||
(in millions) | EBITDA (Income from | |||||||
Income from | Operations plus Depreciation | |||||||
Operations | Depreciation | Amortization | & Amortization) | |||||
Consolidated 2019 Actual Results As Reported | $ | 663.1 | $ | 157.8 | $ | 238.4 | $ | 1,059.3 |
Restructuring, Transaction, & Litigation costs | 229.8 | - | - | 229.8 | ||||
One-time PPA Charges | 185.0 | - | - | 185.0 | ||||
Policy Harmonization | 91.6 | - | - | 91.6 | ||||
Adjusted Results | $ | 1,169.5 | $ | 157.8 | $ | 238.4 | $ | 1,565.7 |
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Wabtec Corporation published this content on 10 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 March 2020 11:38:18 UTC