Exhibit 99.2
[WABTEC CORPORATION LOGO] 1001 Air Brake Avenue PRESS
Wilmerding, PA 15148 RELEASE
Phone: 412.825.1484
Fax: 412.825.1789
CONTACT: TIM WESLEY AT (412) 825-1543
WABTEC REPORTS IMPROVED EARNINGS IN 2003 THIRD QUARTER;
ANNOUNCES TRANSIT ORDER VALUED AT ABOUT $150 MILLION
WILMERDING, Pa., Oct. 15, 2003 -- Wabtec Corporation (NYSE: WAB)
today reported improved earnings in the third quarter of 2003 and also
announced that its Transit Group has received an order, valued at
about $150 million, to supply components for New York City subway
cars.
In the 2003 third quarter, Wabtec had earnings per diluted share
of 13 cents, compared to 9 cents in the year-ago quarter, primarily
due to lower interest expense.
"We had solid earnings for the third quarter and generated $9
million in cash," said William E. Kassling, Wabtec's chairman. "We
expect to finish the year strongly and remain very optimistic about
the company's future growth prospects."
OUTLOOK
For the fourth quarter, Wabtec continues to expect earnings per
diluted share from continuing operations to be between 13 cents and 16
cents, based on its current backlog and the expected timing of new
business.
"We are refining our operating plan for 2004 and expect to
forecast continued earnings growth, based on preliminary market
indications," said Gregory T.H. Davies, Wabtec's president and chief
executive officer. "In the Freight Group, for example, we expect
industry freight car deliveries to be as much as 20 percent higher
than 2003, which should finish around 30,000 units. And we're
forecasting even stronger growth in the new locomotive market, with
deliveries expected to exceed 1,000 next year, compared to about 700
in 2003. Our aftermarket freight business will depend on general
economic conditions and on freight rail traffic, which continues to be
flat. We expect the transit market to be essentially flat in 2004,
with very modest growth in the original equipment segment and
continued weakness in the aftermarket due to local funding issues.
Looking further into the future, we expect solid growth in the transit
business in late 2005 and beyond, as we ramp up component production
for New York City's historic subway car order." (See below.)
2003 THIRD QUARTER RESULTS
Sales increased 4 percent compared to the prior-year quarter.
Freight Group sales increased 16 percent, primarily from higher sales
of freight car components and commuter locomotives. Sales in the
Transit Group decreased 21 percent, primarily due to lower aftermarket
sales. Gross margin was 26 percent compared to 26.8 percent, primarily
due to normal seasonality and the unfavorable effects of foreign
exchange rates on the company's Canadian operations.
[WABTEC CORPORATION LOGO] 1001 Air Brake Avenue PRESS
Wilmerding, PA 15148 RELEASE
Phone: 412.825.1484
Fax: 412.825.1789
Selling, general and administrative expenses increased primarily
due to higher insurance and medical premiums. Engineering expenses
were lower as the company capitalized design engineering costs
associated with the New York City transit order. Interest expense
decreased due to the lower level of debt and lower interest rates
compared to the year-ago quarter, and a charge for the early repayment
of bonds in the year-ago quarter.
Other income improved by $843,000, primarily due to foreign
exchange. The company accrued income tax expense at a rate of 36.5
percent, compared to 35 percent in the prior-year quarter, reflecting
higher effective state tax rates.
During the quarter, Wabtec generated cash from operations of $9
million and EBITDA of $18 million. At Sept. 30, 2003, the company had
debt, net of cash, of $164 million (42 percent of total capital),
compared to $194 million (50 percent of total capital) at Sept. 30,
2002.
NEW YORK CITY TRANSIT ORDER
WABCO Transit, a Wabtec division, has signed a contract to supply
brakes, couplers and current collectors for New York City subway cars
to be built by ALSTOM and Kawasaki. The contract is worth about $60
million for the base order of 660 cars. If, as planned, New York City
exercises options for an additional 1,040 cars, the total value of
this order would be about $150 million. In addition, Wabtec continues
to negotiate to supply door assemblies for the cars. Design work on
the brakes, couplers and current collectors has already started, with
prototypes to be delivered in 2004.
Wabtec Corporation (www.wabtec.com) is one of North America's
largest providers of value-added, technology-based products and
services for the rail industry.
This release contains forward-looking statements, such as
statements regarding the company's expectations about future earnings
and market conditions. Actual results could differ materially from the
results suggested in any forward-looking statement. Factors that could
cause or contribute to these material differences include, but are not
limited to, a slowdown in the North American economy;
lower-than-expected orders for new rolling stock; and other factors
contained in the company's regulatory filings, which are herein
incorporated by reference. The company assumes no obligation to update
these forward-looking statements or advise of changes in the
assumptions on which they were based.
THE COMPANY WILL CONDUCT A CONFERENCE CALL WITH ANALYSTS AT 1:30
P.M., EASTERN TIME, TODAY. TO LISTEN TO THE CALL VIA WEBCAST, PLEASE
GO TO http://www.corporateir.net/ireye/ir_site.zhtml?ticker=WAB&script
=1010&item_id=796167.
###
WABTEC CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Third Third For the For the
Quarter Quarter Nine Months Nine Months
2003 2002 2003 2002
---- ---- ---- ----
Net sales $ 167,189 $ 161,422 $ 511,568 $ 518,555
Cost of sales (123,764) (118,138) (375,305) (385,135)
--------- --------- --------- ---------
Gross profit 43,425 43,284 136,263 133,420
Selling,general and administrative expenses (23,948) (22,170) (72,084) (69,124)
Engineering expenses (7,746) (8,532) (24,260) (25,113)
Amortization expense (1,084) (1,412) (3,129) (4,246)
--------- --------- --------- ---------
Total operating expenses (32,778) (32,114) (99,473) (98,483)
--------- --------- --------- ---------
Income from operations 10,647 11,170 36,790 34,937
Interest expense (2,433) (4,943) (7,230) (15,832)
Other income (expense), net 526 (317) (3,283) (1,822)
--------- --------- --------- ---------
Income from continuing operations before income taxes 8,740 5,910 26,277 17,283
Income tax expense (3,190) (2,068) (9,591) (6,049)
--------- --------- --------- ---------
Income from continuing operations 5,550 3,842 16,686 11,234
Discontinued operations
Income from discontinued operations (net of tax) 53 48 126 229
Loss on sale of discontinued operations (net of tax) - - - (529)
--------- --------- --------- ---------
Total discontinued operations 53 48 126 (300)
--------- --------- --------- ---------
Income before cumulative effect of accounting change 5,603 3,890 16,812 10,934
Cumulative effect of accounting change, net of tax - - - (61,663)
--------- --------- --------- ---------
Net income (loss) $ 5,603 $ 3,890 $ 16,812 $ (50,729)
========= ========= ========= =========
EARNINGS (LOSS) PER COMMON SHARE
BASIC
Income from continuing operations $ 0.13 $ 0.09 $ 0.38 $ 0.26
Income (loss) from discontinued operations - - - (0.01)
Income before cumulative effect of accounting change 0.13 0.09 0.39 0.25
Cumulative effect of accounting change, net of tax - - - (1.42)
Net income (loss) $ 0.13 $ 0.09 $ 0.39 $ (1.17)
DILUTED
Income from continuing operations $ 0.13 $ 0.09 $ 0.38 $ 0.26
Income (loss) from discontinued operations - - - (0.01)
Income before cumulative effect of accounting change 0.13 0.09 0.38 0.25
Cumulative effect of accounting change, net of tax - - - (1.41)
Net income (loss) $ 0.13 $ 0.09 $ 0.38 $ (1.16)
Weighted average shares outstanding
Basic 43,553 43,361 43,480 43,267
========= ========= ========= =========
Diluted 44,175 43,615 43,813 43,587
========= ========= ========= =========
SALES BY SEGMENT
Freight Group $ 124,412 $ 107,087 $ 375,624 $ 322,454
Transit Group 42,777 54,335 135,944 196,101
--------- --------- --------- ---------
Total $ 167,189 $ 161,422 $ 511,568 $ 518,555
========= ========= ========= =========
EBITDA RECONCILIATION
Net income (loss) $ 5,603 $ 3,890 $ 16,812 $ (50,729)
Interest expense 2,433 4,943 7,230 15,832
Income tax expense 3,190 2,068 9,591 6,049
Cumulative effect of accounting change, net of tax - - - 61,663
Depreciation 5,404 4,842 15,208 15,021
Amortization 1,084 1,412 3,129 4,246
--------- --------- --------- ---------
EBITDA $ 17,714 $ 17,155 $ 51,970 $ 52,082
========= ========= ========= =========