Wabtec Slips After Missing On Q3 Revenue Estimates, Tightens FY21 Outlook - Westinghouse Air Brake (NYSE:WAB)

Westinghouse Air Brake Technologies Corp WAB (Wabtec) reported third-quarter FY21 sales growth of 2.2% year-over-year to $1.91 billion, missing the consensus of $2.08 billion.
Adjusted EPS $1.14 beating consensus of $1.12.
The gross margin expanded by 120 bps to 31.6%.
The company noted sales results were adversely impacted by 2% to 3% during the quarter due to supply chain disruptions.
Freight segment sales were $1.3 billion, an increase of 4.7% Y/Y, and segment adjusted margin expanded by 170 bps 20.6%
Transit segment sales were $612 million, a decrease by 2.5% Y/Y, and segment adjusted margin expanded by 50 bps to 12.5%.
The operating margin expanded by 30 bps to 11.4%, and the adjusted operating margin expanded by 130 bps to 17%.
Wabtec generated cash from operating activities year-to-date of $759.3 million, compared to $458.1 million a year ago, resulting in 103% cash conversion.
Adjusted EBITDA increased by 5.6% Y/Y to $373.5 million, and margin expanded by 62 bps to 19.6%.
The company’s backlog at the end of the quarter was $21.84 billion, an increase of $314 million higher compared to June 30, 2021, due in most part from increased orders in Freight Services.
It held cash and equivalents of $456 million and total debt of $4.07 billion.
During the third quarter, the company repurchased 2.3 million shares for $199 million.
FY21 Outlook: Wabtec expects sales of $7.90 billion - $8.05 billion (prior expectation $7.9 billion - $8.2 billion), versus the consensus of $8.08 billion.
EPS of $2.87 - $2.97 (prior $2.87 - $3.07) and adjusted EPS of $4.20 - $4.30 (prior $4.15 - $4.35) against the consensus of $4.26.
It expects strong cash flow generation with an operating cash flow of about $1 billion.
Wabtec expects higher commodity costs and shortages of component, chip, and labor to create a more challenging sales and cost environment in the fourth quarter and into 2022.
Price Action: WAB shares are trading lower by 1.39% at $90.41 during the premarket session on Wednesday.

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