Wabtec (NYSE: WAB) reported Q2 EPS of $0.75, $0.19 worse than the analyst estimate of $0.94. Revenue for the quarter came in at $932 billion versus the consensus estimate of $1.01 billion.

2017 Second Quarter

• Sales were $932 million, a 29 percent increase compared to the year-ago quarter, as higher sales in the Transit Group more than offset lower sales in the Freight Group. Transit sales increased due to the Faiveley Transport acquisition. Freight sales were affected mainly by lower revenues from freight car and locomotive components, and a slower-than-expected ramp-up of certain projects. Changes in foreign exchange rates reduced sales by $15 million compared to the year-ago quarter.
• Income from operations was $114 million, or 12.2 percent of sales, including restructuring and transaction expenses of $9 million related to the Faiveley integration and ongoing cost-reduction activities. Excluding these expenses, the company’s operating margin was 13.2 percent, similar to its adjusted operating margin in the first quarter of this year.
• Net interest and other expense was $17 million, reflecting a higher debt balance due mainly to the Faiveley acquisition and a non-cash foreign exchange loss. Net interest expense included a $2 million benefit related to the prepayment of debt assumed in the Faiveley acquisition.
• Income tax expense was $25 million, with an effective tax rate of 25.4 percent.
• Earnings per diluted share were 75 cents. The net effect of the restructuring and transaction expenses and the interest expense benefit reduced earnings per diluted share by 5 cents.
• At June 30, the company had cash of $329 million and debt of $2 billion.
• During the quarter, the company’s total, multi-year backlog increased 10 percent compared to the first quarter, to a record $4.5 billion. New orders included more than $350 million for Transit projects in Europe and Australia, and more than $60 million for train control and signaling projects with the Belt Railway Co. in Chicago and the South Florida Regional Transportation Authority.
• Also during the quarter, Wabtec acquired Thermal Transfer, a manufacturer of heat exchangers for industrial markets, with sales of about $25 million; and Semvac, a manufacturer of sanitation systems for locomotives and transit vehicles, with sales of about $15 million.

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