Wabtec’s Preliminary Results Disappoint

Wabtec (WAB) won’t report its earnings until February 20, but the company released preliminary Q4 results today. Looking past all the adjustments due to tax reform, WAB expects Q4 earnings of 90 cents per share which is a five-cent miss.

Here are some details.

*Revenues of about $1.1 billion.

*GAAP earnings per diluted share of about 55 cents.

*GAAP earnings are expected to include the following impact from the U.S. tax reform bill that was enacted in December 2017: expenses of about $55 million, or about 57 cents per diluted share, for the repatriation of earnings; and a benefit of about $52 million, or about 53 cents per diluted share, from a reduction in deferred tax liabilities. Therefore, the net impact of U.S. tax reform in the fourth quarter is expected to be an expense of about $3 million, or about 4 cents per diluted share.

*GAAP earnings are also expected to include: contract adjustments of about $24 million, or about 18 cents per diluted share, for higher-than-expected costs to complete certain existing contracts; and expenses of about $18 million, or about 13 cents per diluted share, for restructuring and integration actions.

*Excluding the impact of tax reform, the contract adjustments, and the restructuring and integration actions, fourth quarter adjusted earnings per diluted share are expected to be about 90 cents.

*Cash from operations for the quarter was about $145 million, and the company had a year-end net debt balance of about $1.6 billion.

*At year-end, the company had a record, multi-year backlog of about $4.6 billion, 2 percent higher than at the end of the third quarter.

Raymond T. Betler, Wabtec’s president and chief executive officer, said: “2017 was a year of transition and positioning the company for the future. We made excellent progress on integrating the Faiveley acquisition, implemented common processes that we believe will improve our project execution and performance, improved our cash flow generation each quarter, and continued to invest in our growth strategies. We are finalizing our financial plan for 2018 and expect to generate growth in revenues, adjusted earnings per diluted share and cash flow from operations.”

The shares are down about 5% this morning.

Posted by on February 2nd, 2018 at 10:01 am


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