WAB - Earnings call transcript Q1 2021 | Westinghouse Air Brake Technologies Corporation

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Operator

Good morning and welcome to Wabtec Q1 2021 Earnings Call. All participants are in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference call over to Miss Kristine Kubacki, Vice President of Investor Relations. ahead. go Please

Kristine Kubacki

VP wabteccorp.com. Good financial quarter operator. Relations accessed President on and to website our and and welcome CEO, slide today, Mastalerz. Thank along earlier were presentation, earnings morning, our posted call. on tab first with Senior Dugan; Pat XXXX Santana; release are be Finance, With Wabtec's Investor John Rafael Today's and you, earnings CFO, everyone, of disclosures, us can and our today on

Some today the on and making statements best our our based we're and forward-looking are today. view world of business

more relating please earnings statements, For uncertainties, risks, in and release detailed and to our our disclosures the assumptions forward-looking presentation. see

carefully We non-GAAP metrics. you metrics these read the as I will will encourage now tables over and you financial discuss to Rafael. turn consider our also to call reconciliation disclosures and

Rafael Santana

We morning, joining Thanks, everyone. today. and appreciate Kristine, you good us

this to market. North lean OEM a transit, by but in $XXX actions due America our strong, and services operations mods. trends operating to offset the recovery management, transit XX.X%, with billion. freight Turning see quarter, mining recovery to to global infrastructure cash our driven a from This was directional which providing quarter prior million. the weakness in in into in Nordco, a and in equipment are North to good long largely moment. flow was better and freight agreements we the in adjusted continued our of in and acquisition I'll to area American international the sales a In generation allowing cost our capital strategic the execution three, $X.X was of touch along with are backlog company are steps first investments positioned the deliver and and upon on strategic billion, of transit we slide us we're markets rate transaction. by volumes transportation by exited sequentially margin improving initiatives, the markets, quarter, by mix across freight and Cash on we have of favorable utilization the ended stemming and driven plan working Adjusted we profitable reflected Total was continue beyond. value. deliver of track including service the was quarter, In with long focus the run for Total of first large results. quarter enforcement part visibility conversion multiyear team huge team continuing. us over were control priorities, and a for can shared performance against a shareholder financial from This rail ahead from $XX.X Cash sequentially synergies [XX:XX] the was first of more necessary Overall, XXXX continuing growth. with that growth teams what the on increase take to of we the year, synergies, the deliver strong $XXX execution EPS all merger our million term company This quarter complex schedule. the up $X.XX, full and tremendous in term

XXXX. X% will In aggressive last addition, reducing includes our further X% by additional since costs. year, take we the operational square footage for total remainder January continue actions square on and to structural an by footage This of we reduce of

initiatives execution our opportunities term on that continue reductions through lean focus with we'll high balance growth. additional drive and strategic profitable drive return investments and forward, Moving long to cost

of aftermarket of maintenance units. and to be accretive opportunities significant this Integration flow in significant to Nordco, expect edge growing driving a long liked acquisition recent acquisition segment, invested our over activities strategic of waste are XXXX. leading return business capital to install services in and a the cash revenues we We with maintenance It underway, profitable up XXXX this already opens its and while leader expand in XX% of earnings, that base saw technologies. which waste term growth. domestically and space, You internationally from its of on the is with coming and really

the focused driving FDL for is key the commercial a growth some environment. [XX:XX]. despite orders and a On product, won front, in get significant also we're which upgrade deal quarter, included challenging fuel a our on This Advantage

of With technology, it means have dollar pipeline for there opening shared as locomotive can to was game savings are well FLXdrive per transportation, up gallons when demonstration, locomotive, fuel, rail. decarbonizing $XX,XXX drive than differentiation up a reduce this our single we're locomotives a both a by testing technology in drive Also translate it opportunity it this in milestone completed XX%, consumption burning to fuel significant FDL year. in down before, and globally. comes than fuel the of track. that down services, into a [XX:XX] As able more of we sustainable by XX,XXX Through miles FLXdrive consumption XXX,XXX than helping we X%, changer as customers running multimillion with and electric battery BNSF more with across XX,XXX national That emissions to is emissions. operational more revenue

digital PTC rail the utilization. term. control key by train way in customers for become the long this and positive locomotive for strong America also the growth important safety growing our and expect We to we're from North see over of internationally, interest an the In gen We leading we internationally, closed of encouraged order we're both and for area and continue in in international next order expansion. and electronics, pipeline company electric battery to technology the

who growth quarter and our a and shareholders, equipment, our the back train continues Wabtec India, age freight France, to on for [XX:XX]. customers and strong new will [XX:XX] to our multiyear that, the had our Based Pat a orders order Finally, our for and [XX:XX]. platform position. doors pipeline driven turn winning I'll contracts by and to quarter, transit, in and stature stations reveal Taiwan order in drive for in solid a gates in performance atronics in the XX overall segment and breaks, is over we significant digital employees. With call at financial including Overall, strengthen perform Marcel and services, for orders [XX:XX], profitable over position doors

Pat Dugan

Thanks, profitable deliver good future, despite cash We from Rafael, ability and pandemic. OEM a morning the flow, challenges disruption North our year had the invest synergies, America, ongoing everyone. start for operational our the growth. Wabtec for and generate to demonstrated to on We position in the markets and solid

the were $X.X view X% disruption quarter quarter pandemic. versus billion, by first our America by four, the Sales reflects the result markets a in the caused North which slide to freight Turning of as for of year, decrease a OE the driven more prior detail. first lower

deliveries, at lower fourth from sales quarter. of of from electronics was transaction from points quarter in For XXX our restructuring along fewer last income, facilities, locomotive volumes was well to year-over-year. margin XXXX to and income expenses excluded X% basis mix adjusted the as quarter, stemming basis $XX the due year, up pre-tax under-absorption operating which Versus down first year, restructuring operations. manufacturing impacted impacted was than operating points acquisition as but costs and to was of Adjusted and of with million, the costs digital and $XX XX multi-year, the a was continues million, adjusted $XXX Nordco, backlog our At higher million and operating was of March is operating backlog, billion was into amortization a margin transit quarter-over-quarter, level up Adjusted year. provide lower sale. XX-month $X.X million $XX.X XXst, restructuring for the our which multiyear the rolling operating subset related locomotive last UK which billion, visibility of the good by was a income million, $XX $XXX non-cash and

This at and Looking detailed was the year-over-year headcount SG&A during expenses. of benefited of to to for realization of $XX SG&A reductions actions and quarter, cost the $XXX line the items of million the downturn, the from excludes result declined X% expense transaction some and first restructuring synergies. adjusted million.

by be following full the expect and we decreased continue from the headcount to the manage For expenses versus aggressively said, to disruption. year. costs Engineering we of COVID normalization will XXXX, structural SG&A up That X% driven about last to due year, changes in year, is X% timing. investment X% to well project Overall, in sales. some million. be were our the outlook of for as locomotive technology largely expense as Amortization lower was This $XX volume about still costs. the expected to

amortization expect and For about XXXX, non-cash million. million of $XXX expense $XXX expense to we be about depreciation

certain was than tax higher XX.X%, to due quarter. items year-over-year Our adjusted during discrete the which rate effective was

tax XX%. be a to year rate expect We XXXX full effective about

earnings The and per per share first diluted GAAP quarter diluted $X.XX, were adjusted share were $X.XX. earnings

but year last services slide a segment, North five. end driven X% America the offset freight growth. look from primarily to aftermarket decreased at Let's on total by Across partially $X.X strong results OE markets, take by sales the billion, segment and

product down persists. unfortunately of equipment deliveries dynamics terms lines, a last our zero were XX% due deliveries year, mainly America, fewer roughly resulted in that which In locomotive in North to XX% sales versus year-over-year,

in expect versus product opportunities demonstrating line, due up with from we the the This to O improved X% by year-over-year, our from components freight quarter. strong quarter diversification last volumes. sales deliveries deliveries digital continue customers in sales the a in as modernization year-over-year, down timing was multiyear with gradual electronics build quarter was XX% freight XX% lower and X% weather of up see extreme during that business. were sales on the our mining improving improved spot pipeline railcar and of in the In locomotives a driven is [XX:XX] recovery to year momentum significant quarter. disruption. America note our right sales the solid strong North bright digits However, productivity. orders revenues to services and were sales quarter, compared largely This down safety to shifted the had electronics mod to orders XX% and units another and COVID line but with the year-over-year. was to to aftermarket for parking varies Digital focus sequentially. within we of due a the as Yet, higher I'd traffic, double services improve our of

margin the cost of We aftermarket adjusted see to signs due well locomotive operating continue was year, improvement deliveries. million by adjusted benefit as sales XX.X%. of storage. come lower an offset for Versus to synergies out segment last Freight rail actions cars as demand under for as mix, and components of were and $XXX of absorption income more

our to synergy continue on will improvement. further execute improve costs We plans to and margin drive

prior freight across backlog the segment on multiyear segment. quarter from the broad was billion, Finally, up order $XX momentum

were to favorable foreign and increased last sales offset roughly steady disruption year. Turning flat across $XXX slide Aftermarket in by aftermarket from green million, driven sales our continued segments, sales from demonstrating exchange were six, pandemic. to the infrastructure. sales X% investments year-over-year, up X% transit the largely COVID-XX rates, OE by year-over-year somewhat about

services as the to expect drive We aftermarket pandemic. adjusted the and segment continue $XX project continue was to was a segment, operating up challenging XX.X%. improve cost improve income transit sales an demonstrated X% Adjusted by of operating for we performance, despite execution increase globally. million, and our year-over-year environment margin to to down Across which operating ridership good due

are XXXX. We underway segment to for the on points of in the XXX committed and execute with pleased drive to margin more teams momentum improvement basis actions are this

segment backlog transit $X.X Finally, billion. was

was a financing largely $XX securitization, management, income quality driven position on and million turn of accounts net good of Despite Cash flow quarter, of the $XXX seasonally business our cash working a portfolio. receivable provides benefit demonstrating by including which attractive flow, from incremental seven. and liquidity. financial million challenging capital focused let's and our to operating generated provides resiliency we Now, conversion slide

us on total quarter, our which of of was allocation about XXXX, generation expect the strategic and the Nordco, allowed $XXX drive profitable million, cash Capex be to expected execute million. CapEx strong sales. capital plans During Wabtec. $XX or will priorities, we including our for about acquisition In X% strategic Overall, to growth

X.X at robust adjusted was times billion. our first $X.X of the the leverage end liquidity quarter Our ratio is and at net

remains the sheet us giving can turn we the over to drive You flow can generation, are Rafael. grow value. continue shareholder to allocate confident capital balance we I'll and solid cash to strong, flexibility in these see back call results liquidity With our to that,

Rafael Santana

Thanks, Pat.

COVID seeing aligns eight, Overall, markets This monitor some slide global by as dynamics regions we're across to evolving like with we're customers, end situation recovery market look improves. And continuing gradual activity what Turning segments. economic let's of well. heard the most in to the our from a you've as at India.

by record local a improving parking new markets. from high across market, While the broad are through continue as quarter. the to the result in the trough volumes stagnant, disruptions we agriculture, and increased of encouraged work we weather where are to a traffic sequential Locomotive a improvement in orders after and stemming freight freight XXXX North recovery industrial the remain American during demand peaking and intermodal in

demand We expect rail for back This continue a will and portfolio. cars railroads the rail America are use, more than year to forecast fleet our but productivity weak XX,XXX orders strength remains comes be remain storage, car of and recover. position North across XX% coming it's reliability it to rail put to build cars build, the North into estimate improve us back as freight for below car rail of American the pre-COVID cars. levels. to in this in to car new When rail Industry

going term revenue in And mining, improving. in Transitioning several open markets sector, strong market but long as conditions ridership economies a these internationally, up. to transit growth We uneven, pipeline is have of are and the also we recovering forward. expect order

infrastructure We as for governments the term to as a for rail strong evolves transport market globally term several drivers turn in especially the safe clean, and green remains spending passenger efficient to short Overall, including continues and and initiatives are watching transport. for long focus, Europe. pandemic be dynamics India geographies,

for guidance to year. Turning the

and and half guidance initial $X.XX. a $X.X our This updating with to as XXXX, a us conditions our only especially Nordco, for and We our freight trend will we backlog. is date, the sales second forecast billion growth Consistent our we $X.XX are and acquisition continue from first expect quarter That swift positive for to reflects like EPS and visibility of region quarter. upside are second take gradual the with from COVID, in evolve. markets. of weighted of to to in disruption to guidance earnings we billion slightly execution resurgence action range than to higher the largely the more with This $X.X operational updating said, in to seeing key line India, of the year, to adjusted the necessary

Finally, delivering cost cash year, we confident expansion as generation as in to actions. for remain margin well strong prioritize the

the the I'm of strong to in to slide and nine, challenging by conclude, despite quarter, Turning environment. proud execution first the a team

on and freight costs and synergies, go forward, and generating we profitable the lean strong plan. growth. committed expansion to we our includes into continue strategic margin As flow, will of remain to transit This on company driving the long-term our strong segments, reducing and executing fundamentals term across executing cash delivering long

discussion. of to the the confident our XXXX, a in As we've purpose, globally said I'm Q&A sustainable the that begin long this I'll move term before, to will be our industry a And company After growth strong transitioning a more With Wabtec's and our turn quarter up the performance drive day. to that, and portion to of XXXX, to in customers to mission leader the call Kristine profitable and a back every future. improve demonstrating world. mission in and this holds teams larger live first

Kristine Kubacki

Rafael. you, Thank

to We first questions. now on ready question. our are Instructions] now will We [Operator move for

Operator

go [Operator Revich, from Instructions] comes First Goldman question Please Jerry ahead. Sachs.

Unidentified Analyst

is generation Jerry of this Revich. With next on product related stepping wondering you everyone, can total the for investments provide I'm up Hi in fuel proportion to decarbonization any if portfolio, the details technologies? R&D [XX:XX]

Rafael Santana

number clear been to overall around to the on the introduce fuel range a with committed those step very really number way of here up working working decarbonization. think investments We're customers, path X% it. some we're areas tied of course, to And lead of to We're fuels, but investments of areas kind taking include electric. the to stairway there. I on to through in lines of the also, to renewable the the lead we've continuing much And And working We're a see X% developing along on of sales. kits. biofuels, to of upgrade elements the all We're that's sales. progressing we

Unidentified Analyst

and activity of that's compares pace of if comment mods how Great, you just and wondering how sort trending I'm XXXX, XXXX? to the in can on then, that

Rafael Santana

double significant positive be believe see will reflected and digit had step an where have that the growth, in first mods you we that to quarter significant a from healthy we up, We've continue for fuel-efficient, us. call, what upgrades them them into I for safer, and growth the make to It's a of introduce, efficient. make fleet and area clearly pathway just overall, us more more

Unidentified Analyst

Great, thank you.

Operator

Next question Long of ahead. from Justin Stephens. go is Please

Justin Long

EPS Thanks, just if you the that other and underlying impact you in set good and share morning. about ask I made can any XXXX baking of Nordco to you the wanted acquisition changes high aside, curious this you've that that you're about that year? the from if that revenue And I guidance. And the was level to talk are a guidance? from acquisition assumptions could some

Rafael Santana

we Let continue, narrowed but then the I'll me and Pat let guidance. start have

raised the the quarter the mining, the midpoints operational modernizations. year, strong the have in We positives given of executional strikes include I think

And so, see COVID. we chain disruptions At of we continue Nordco. the also the strong to acquisition numbers we same Justin, driven around and see with being have part on locomotives headwinds, continue time, by supply to

And I transportation impactful guidance recovery prices had in in over on, our situation of of it we and we certainly to think end to falling momentum across see currently reflected I'd the gradual we've wins say, but most is which that is markets. most all overall have are commodity provided. we're costs, when comes continuing is India, positive. a

Pat Dugan

Justin. Hey,

on an about earnings what of $XX when and -- we the million EBITDA had on So press million is we the disclosed an of sales this for release basis acquisition, the annual similar annual $XXX Pat. We're did to basis. on Nordco

of at the quarter, end of second basically beginning it quarter. bought So we first the

year. the is $X.XX talked full for kind the EPS The about pro year. rest around impact, rata it for we've of the of So it,

so gave where the ultimately guidance to the Plus, increase it got in and today. range. our end So, of some bottom the we a that's lot us performance confidence, included of the of good obviously, far

Justin Long

That's we're sense up, couple for in storage is also, as how great. to Rafael, on Could Okay, I a helpful. fleet what locomotive wanted stored us because you So And mentioned effectively locomotives. recently your we I'm low curious the storage? fleet and still call that around to you with, actually you of side utilized parked percentage follow percentage today? that answer always And what is teens we'd a usable, times feel utilization And rail love percentage on fully of like that something hear of that, mid-teens, it, secondly, on the maybe that. thoughts fleet you has trended? car give then get

Rafael Santana

back So the pre-COVID perspective, the just we're regarding the progress just with overall, to locomotive fleets. levels is good yet, especially not industry from parkings still our

I us, positive when think which ahead overall industry, at a we the of look globally. we're operating is for our fleets overall

So certainly trend. that's positive a

I bit, So last still part, a called little you think units post-COVID. from were have what that are

the look when it's storage potentially here. a utilized in Now, be pre-COVID, and you at part, smaller units, can number unit that those

think the to ultimately So in having differentiator and positive, is here, wallet. availability, of us continue going half second we're to especially especially we're pleased share which is with as to really to watch year. more the customers we're closely terms with for winning going reliability of the I momentum performance that And we're of the

good power positive including there, So, looking I'll wiped [locomotives us. recent for, you've seen say a out positives. are Both last spare piece of is, news those call, are available The are number I some out what out customers the for XX:XX] motions probably mentioned, announcements,

Justin Long

Thank appreciate you. that's I the helpful. Great, time.

Operator

go Next Wolfe Scott question ahead. of Please Research. Group from

Scott Group

morning. good thanks, Hey,

Just going guidance here. back the to

the like just half is seasonality. standpoint, looks first the you year? that see take, the what's from us typically second driving year second and a of the in Can ramp assuming XX% don't earnings half of half you're we give understand the help level or such it than big about So an higher of

Rafael Santana

the year. with half weighted XXXX, consistent think I of the second we have growth more have Scott, for we to initial forecasts

quarter. we're the in regard, first think improvements sequential that to I continuing see in

goes while think about increased are these orders to impact bill, XXXX. to of it's If you multiyear in beyond to orders, XXXX, there's book some the an impact your X.X,

deals just of quarter strengthen, think a good have momentum continued pipeline to and I I there's we has think our also year last of coming progress out being good tough so year today.

up momentum month XX into about convertibility we've and and really X.X%, our good and orders backlog Our to rolling on year forward. got this pipeline building is of focus of

Pat Dugan

start is, with into think think much with to [XX:XX] I important just previously maybe are quarter. monitor, volatility, India, think quarter as very we've We elements we'll regards is But contained continue to of I to situation discussed, market which tied the got us. that's especially disruptions. for the a some especially COVID those

Scott Group

just Okay, a up follow there.

freight additional half second more or Just some be international? transit about the domestic or great. is would versus So color

Rafael Santana

to about I just we've if US. business it, internationally in grown think the than terms more of continue international in think markets sales, be our robust, you

So the been, be locomotives. growth foreign I OE largely North some on market to around quarter. Internationally, I think robust here convert to very in the convertibility, and working to of call focused some is much that teams the got continued it, very between the tied American second team more we've ways, third side think going has is opportunities on parking

So, those build of growth. critical are continuing profitable to elements

Scott Group

say pre-COVID international you back levels? at Would is

Rafael Santana

how in [XX:XX], I of lot year, terms for a think Scott, you if I'd the our on there's was, from last basis And gained now, scratch about think of you points about five services more room let's say it, think momentum about largely, versus international say, there. business when forward. it's much momentum

you quarter it, to we're XX% with a in about So first international. think rate at close probably the

gives that but of North the America. our a there, in So weakness the strength you both sense

Scott Group

Okay, thank you. it. Appreciate

Operator

Next Citi. ahead. Chris question is of from Please go Wetherbee

Chris Wetherbee

about the obviously, incremental has the we dynamic you year, over course freight synergies challenging last as and the context do in have you several that about in been think ramp of in about has the maybe of you're you how can second fixed challenges been of that the the Hey, for of sort know revenue more you to thanks. and costs I morning. quarters. one the wanted the I Good working ask business? volume margins that through, think how absorption, of half but

as So see somewhat is we that half year? into second snapback potentially the move something where of large the we could

Rafael Santana

me on margins freight one, in are transit we two and both answer Let improve ways. side. the committed the Number to

in On to the expect opportunity to of necessary we And side. OE towards improvement transit but clear certainly improving there's think for to year, it actions. of through freight we overall. terms the we're I on taking what working opportunity more in that it terms When team the be. striving really the side, comes points, sides, dynamics services the the there's the we've those of expect we base been is here, certainly probably side, working much when really XXX not mining gaining volume also comes And have really some

for positive into also is mining a year. us here the So

think just way about it. that's So maybe to the

Pat Dugan

year should and and we of Chris, synergies year can of a the being full keep the everybody margin full view considered. really that's But a by SG&A. projects other driven being you the is overall need a type and and impact improvement volumes a a improvement and a of costs quarter least back, the coming some about what offset be through at year, at point is full year what the of cost bit Yes, But our absorption that and to I items in overall improvement the little explicitly view in transit reminding margin for by of timing be margin, at to combination deliveries. from talked company, as normalization basis quarter, look there really some achieved, XX we progress

Chris Wetherbee

obviously target this Okay, that's on helpful. up I that. the And comment, a year. have just appreciate for synergy then, you picking

you is? time, do are? you had go you've combined a period through XXXX, to for obviously, company As to it's think the least. Obviously, of macro the what see And been a backdrop, opportunities the opportunity say and of challenging now kind opportunity the the what beyond think had

think As sense of give into you might opportunities XXXX synergy us a more go firmer what you be? footing, on get and sort can the potential of we bigger-picture maybe

Rafael Santana

about I this think beyond I'll qualify year last those synergies. [XX:XX]

hard to working lean sure done really I lot And we're that there think to think approach. progress there. be a culture a we with I is make

think in some we of gains, I more And rationalizing we've in work some about how of think Nordco. we of of about think critical more, of acquisition think key I around productivity terms the our you started sites. think how can footprint, a and doing number really change

think us expand internationally volume in that will a I be also of that positive to provides good opportunity utilize it a and and recovery footprint customers regard.

lean around it's efficiency, mindsets, drive So all and we sure make that productivity. productivity, really

Pat Dugan

how of would be to we to, has going how into DNA margin rationale look of improve I continuously the synergies at truthfully, the we've tried refered productivity Rafael was the just so but very to we just about is, add just a we future that big all been always companies can Yes, company communicate look strategic together, about years. gains, such disciplined lean part at it initiatives, because putting and that, the things that the

Rafael Santana

in there in a terms We broader you has been focus productivity our if forward. especially about thatg really impact think moving to expand got XX sites, Largely, of today, drive them. of to here

Chris Wetherbee

helpful. it. time. for that's Appreciate Okay, Thanks the

Operator

Thank you.

is ahead. Allison Fargo, question from Next please Wells Poliniak go of

Allison Poliniak

morning. good Hi,

that you the to progression know, suggested it side, understand growth, turning Just this where gives comments stronger the that time I significantly you for comfort it second a to Is implementation would I from here? your Could digital of active guidance maybe the something as well. mean, through to like flattish you kind us you. certainly for the leads say be half digital an short, to sounds going get help of to to it's like that that order flattish? market incredibly year is and the pretty

Rafael Santana

we think I customers. here see that continue internationally. Allison, commitment from We certainly So saw a strong to

both quarter Our year. year last quarter and strong fourth book-to-bill was first of on this

look what I last imperative. said. and remain at to you year, an those both some efficiency, of they when back provides But that productivity into just being that So safety just due out pushed With customers, said investments COVID.

the for is year continue. multi those We team this The year expect at to point. very compatibility on awards focused

impact strong saw So some this year. that we with of the book-to-bill beyond

this really will year continuing on focus a lot for invest convertibility point, to that of for long this at term So to us. business provide continue growth business we're the in

is with locomotives digital there and I shipments. also think element the more the mind I an Whenever of into that of America call element goes software here hardware. and keep number significant delay what ship locomotives North in

not we're drop, that with So that. seeing

that's another being to want element I packed So just that of highlight.

Allison Poliniak

you Thank lines drive, just then that flex on the it. service. the locomotives, Got completed know, And you you. the of revenue in test

you generating in the how in you you? whereas a know, we that, terms of inquiries. of of the and sort timeframe interest be quality, about think could of ‘XX locomotive, should for the ‘XX something know, more revenue some mentioned You Is those

Rafael Santana

Allison, of have company. interest year next impact would be but the expect battery not an outs. a to strong, electric specifically, be That long growth for part we proposals is we with term

we a of so see areas that where number applied. could And be

customers. is to we're this So And really very these drive combines discussions some product with think strong the having unique And a I from strong ESG challenges. with address the side. focus flash

continue there. So pilots of customers and we're with expect I to do working out that number momentum and the

Allison Poliniak

thank Great, you.

Operator

Alcott Matt Thank is The Please Cowen. question from go you. ahead. of next

Matt Alcott

Thank morning. you. Good

about million you're $XX by backlog sequentially by But I increased So you're December. a total XX think million. backlog your month increased from backlog $XXX

years I any for the more wondering sense? in new forward by than was he was makes has if the had that some orders pull So or XX if the next any were years month offset cancellations out that if there from

Rafael Santana

part me of let with end question. your the start We

think we it to on fits we're whether not both had freight fits have where So Yet, continuing segments, it see I transits. cancellations. momentum and

momentum quarter-by-quarter, an lead the to We on which is today. projects that element good. lumpiness there's course, of see some into quarter our in business, with book-to-build but Of can

trend. to had, good momentum also we've continue I think, So [X:XX:XX]. a kind on of that That's

Pat Dugan

element spread more be Yeah, longer would so there's that the can I hurt, also imagine that backlog the have a $XXX out we an our of of impact number. of period by and exchange you operations international And about foreign you know, our million. multiyear backlog if number International those And, projects, FX impacted time. are over

full the more impact number. number, XX not that the is think I into so And weighted FX month overly

Matt Alcott

of year then over long helpful. question. That's about term It's my transit, of And And a were patent been there concerns since prospects lot now, beginning of pandemic. a the just second the referral. the for

know, transit a secular you about you term? conversations shift clarity long your with customers from in any do have potential Now, more

Rafael Santana

We're governments committed transit seeing and customers very overall. to both

cancellations So projects. just of with reiterating that, no orders received

you the moving resilience in of forwards, So see And shown much systems numbers. to our that's operate. service very continue

number of continuing in of being On the through strong of moving moving part fundamentals the forward. that, of transit but thought business see think how things I there's solution for that we're de-carbonize improvements just you I forward, think a terms to top

Matt Alcott

much. you Thank very

Rafael Santana

Thank you.

Operator

Thank you.

Next America. question from Ari Rosa, Bank go Please, of ahead.

Ari Rosa

Yes, hi. morning. Good

surge cases So, obviously, impacts that regrettable of what growth. could more kind potential Maybe be? you there there. COVID has a you the customers you're discussions I and seeing timeline you've kind India And of around had detail we're with of little there, seeing if Do see think in in a know, focus in the go area you any the prospects? mentioned the impacts there? shifting or India could you've into terms been big what

Rafael Santana

really first, chuffed no look in terms you of so the Well, as prospects term.

you if to-date. year think positive volumes fact, actually it's in India, In about freight

here really on perspective. well. So more our following sub-suppliers, is with more it quarter. and this This associated our to tied potentially that report the to customers just as closely lockdown, actions monitor your see to changes. take impacting point. impact, we'll an continue any and the We certainly suppliers, to relevant But we'll We're disruptions as give necessary up

Ari Rosa

Got to past a compared And timeline? market, North the could maybe in look are from cycles. cycle, see terms lingering terms demand understood. we rate return XXXX, do get you American we Do think helpful. give of thoughts of emerging from How Very we the your kind of of you things Or normalized of in do this latest back if kind by XXXX, longer? to just kind on customers? more where a to of it, for you could then could of

Rafael Santana

We're to first the into good It's the the year. see half here. momentum walking of

and locomotives contributing and discussions opportunities momentum new fleet as certainly which going units the towards [ph] year, determinant to customers closely for customers. they their how watching working parts with will to here is will the will half are parking strategies, think are think on modernizations consider in include about of on terms of with We continue the part also second which customers that of be be of I

as So, half discussion second on that based a largely I first half see of concerning the for momentum the year.

Ari Rosa

locomotives business one you the lead of see typically that Between do and other? rail cars, piece

Rafael Santana

the be just I levels parking. think just tied of but to could it XX:XX] [inaudible tends be is to connected,

about you to cars, already freight we're pre-COVID back levels. If think

think not locomotive If we're to from overall pre-COVID an yet you back fleet, level.

of really driven these. determinant which on be could factors about there, think just dwell in and the some elements velocity network, could by which there be delays ultimately times are So, sometimes

Ari Rosa

time. Got it. Great. you for Thank

Rafael Santana

Thanks.

Operator

you. Thank

Boroditsky at Please, Next go Jefferies. Saree ahead. question comes from

Saree Boroditsky

taking due Locomotives shipments. you in thanks X% to Hi, almost the North were [ph] American know is quarter for largely down question. and the this

And of just international You've the full international were locomotives. the locomotive for the clarity, in year? for on should been also view But positive quarter? down long-term they decline

Rafael Santana

think of I I growth about the markets. think more opportunities when international we're seeing

So, driven your here impacts the by was largely those. XX% to I the a on drop quarter point, by in think

to I if double-digit you've think some got we've business, look keep that growth of at specially by think been in that equipment offset our mind in to really able I mining. you

a I think growth business. significant positive in mods So that's being our more and even

So, there's opportunities there.

Pat Dugan

shipments specific large QX international loco said that East. just the Saree, a year-over-year the Middle So, we XXXX, variance in question number to to about specific is of of your had

talked we've at think about various I this time.

year. to of full But locomotive going our overweighting purposes of locos this year had phasing international for the versus an the same are year the So full first year. of as be the for we in quarter the largely last

Rafael Santana

to which long-term we've Brazil, there some includes India, And key Kazakhstan. got orders markets, tied includes includes

audit So in I'll that's keep mind. the

Saree Boroditsky

you could you do back you great And And need realizing revenue for to When just done job absorption. what that then get more you'd Great. by provide under bit a obviously are synergies impacted being think margins? do XXXX-levels? a on free color little You've that?

Pat Dugan

I think or I impact. margin kind don't know that we've talked about any breakeven kind contribution of of

decremental it XX% the way I was in is think margin volume range. at lower year, look to last on the the that low the

how would services But you always the a volume Obviously -- think positive would mix and to that have that with to recovering. timing, modernizations and expect tend impact you have back? be similar we volume and kind in are parts really comes projects, you would mix. imagine, electronics consider I that of the and digital

Some on Ultimately, achieving Wabtec that the we can productivity improvement-type and initiatives, that we're call, talked focused the of gains about lean activity of the be driving is has synergies, this OE below always the on focused we're what earlier is as company elements all continuous that normal, average. on.

Rafael Santana

for includes Wabtec improve and this as forward year that's going really that committed to We're to well. both segments we're and margins on what next driving year across

Saree Boroditsky

that synergies, given lower fair to margins margin modern digital the should but is it Okay, reach to mix, able to just and all positive you service are base? a revenue be say that parts on and XXXX have you

Pat Dugan

margin that But that I to of committed to margin this we're to point, get XXXX back little to we think kind early. up. guidance at driving is give when that in would a

for things considered we I think in volume recovery the really we've see the the happening and that think XXXX of I it's year. that a in good with guidance and early lot

Saree Boroditsky

questions. for taking Thanks Okay. my

Rafael Santana

you. Thank

Pat Dugan

Thanks.

Operator

conference Ms. ahead. This over like concludes back I'd question-and-answer now our Kubacki. go to to the turn Please session. Kristine

Kristine Kubacki

have day. everyone's forward Nick. with We for speaking you, to you next today. great you Thank Thank look participation a quarter. Everyone,

Operator

you for attending presentation. now concluded. is conference Thank The today's

disconnect. now may You

Westinghouse Air Brake Technologies (WAB) 29 Apr 212021 Q1 Earnings call transcript