Tuesday, April 25, 2017

Earnings - Wabtec(WAB)

We received earnings today from favorite 128 year railroad equipment provider Wabtec(WAB). The company reported EPS of $0.77 on revenues of $916 million. The company also completed it's large acquisition of Faiveley Transport. Then proceeded to buy Aero Transport a maker of hatch covers and outlet gates. Then at the end of the quarter they acquired Thermal Transfer a maker of heat exchanger's.  The latter two acquisitions will represent an increase of $65 million to annual sales initially. Sales in the Transit group grew to $568 million and represented 62% of sales on the back of the Faiveley acquisition. Freight sales lagged due to lower freight car and locomotive deliveries, plus  less spending on control related equipment and services.  It will be important to see that type of activity pick back up in the next couple quarters since those are big purchases by railroads, and are a direct indicator of economic health.

The stock has lagged for us lately, but so far is up close to 1% on the day. The company re-affirmed guidance for EPS of $3.95-$4.15. Here is what the CEO had to say

“Our first quarter adjusted earnings were in line with expectations, and we expect improvement during the year. As we work to integrate Faiveley and our other recent acquisitions, we are managing our costs aggressively based on market conditions. We continue to invest in our balanced growth strategies and expect to benefit from our diversified business model and rigorous application of the Wabtec Excellence Program.”

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