Westinghouse Air Brake Technologies (WAB 10.04%), or Wabtec, reported its second-quarter results before the market opened on Thursday. It was an excellent report as the company set another quarterly record for revenue, earnings, and margins while also beating analysts' consensus estimates. The company expects its strong results to continue as it affirmed its full-year guidance.
A look at the numbers
Wabtec reported second-quarter sales of $847 million. Not only was that 16% higher than the year-ago quarter, but it beat analysts' estimates by more than $30 million. Driving this result was the company's freight group, which delivered revenue of $534.7 million, which was well above last year's second quarter showing of $411.5 million in revenue. Further, that strong result helped to offset some weakness in its transit group where revenue slipped to $312.4 million, which was down just over $7 million year over year.
The company turned its strong freight sales into rather robust profitability as it converted 18.4% of total sales, or $156 million, into income from operations, which was up from 18.1% in the year-ago quarter. Meanwhile, earnings per share came in at $1.04, which was not only 14% higher than last year's second quarter, but beat estimates by two cents per share.
Wabtec also generated strong cash flow from operations as it produced $67 million in cash during the quarter. As a result, the company maintains a strong balance sheet with $265 million of cash on hand and net debt of just $400 million. That balance sheet gives the company a nice war chest to continue to make strategic acquisitions, which it was able to do in the quarter as it acquired Metalocaucho, which is a European-based manufacturer of transit products that had annual sales of $25 million.
A look at the outlook
Looking ahead, Wabtec doesn't see anything in its way that would derail its full-year outlook, which is why it reaffirmed its 2015 earnings target of $4.10 per share. Further, the company also expects its revenue to be up 10% for the full year.
In commenting on the company's outlook in the earnings release CEO Raymond Betler said the company is "optimistic about our future growth prospects" due to, among other things, the continued global investment in transportation projects. Further, the company's future organic growth will likely continue to be supplemented by strategic acquisitions as the company has demonstrated its ability to make accretive deals having acquired four companies in the past year alone to bolster its financial results.
Investor takeaway
Wabtec continued its record-breaking pace this quarter as it again set a new quarterly high in revenue, earnings, and margins. The company doesn't expect to see its growth derailed in 2015 as it remains confident in its full-year outlook. Further, with a solid balance sheet the company has the means to continue to make strategic acquisitions to compliment its organic growth.
