Wabtec (NYSE: WAB) reported Q1 EPS of $0.92, $0.02 better than the analyst estimate of $0.90. Revenue for the quarter came in at $1.06 billion versus the consensus estimate of $1.02 billion.

2018 First Quarter Consolidated Results

• Sales were $1.06 billion, a 15 percent increase compared to the year-ago quarter. Compared to the year-ago quarter, organic sales increased $35 million; sales from acquisitions increased $35 million; and changes in foreign currency exchange rates increased sales by $70 million, mainly in Transit.
• Income from operations was $131 million including expenses of $1 million for restructuring and integration actions. SG&A expenses increased mainly due to changes in foreign currency exchange rates and acquisitions.
• Net interest expense was $20 million, reflecting a higher debt balance mainly due to acquisitions.
• Other income was $2.6 million, lower than the prior year mainly due to non-cash foreign currency exchange gains in the 2017 quarter.
• Income tax expense was $26 million for an effective tax rate of 23 percent, compared to 27.6 percent in the year-ago quarter.
• Earnings per diluted share were 92 cents compared to 77 cents in the year-ago quarter. The 2017 first quarter included restructuring and transaction expenses, a tax adjustment and non-controlling interest from the Faiveley Transport acquisition, the combination of which reduced earnings per diluted share by a net of 7 cents.

2018 Guidance Affirmed Based on its first-quarter results and full-year forecast, Wabtec affirmed its guidance for the year, with revenues expected to be about $4.1 billion and earnings per diluted share expected to be about $3.80 excluding estimated restructuring and integration charges. The company’s operating margin target for the full year is about 13.5 percent, and its effective tax rate for the full year is expected to be about 23.5 percent. For the year, Wabtec expects cash flow from operations to exceed net income.

Raymond T. Betler, Wabtec’s president and chief executive officer, said: “Our first-quarter results exceeded our expectations slightly and represent a solid start to the year. With a record backlog and the positive indicators we’re seeing in our core markets, we are well positioned to meet our financial targets in 2018. Our transit business delivered improved margins in the quarter and maintained a record backlog. In freight, we are seeing a meaningful pick-up in the aftermarket. We continue to make progress on the integration of Faiveley Transport and remain ahead of our synergy targets. As we focus on short-term performance, we are investing in our long-term growth strategies and are confident we can deliver improved earnings, margins and cash flow in the future.”

GUIDANCE:

Wabtec sees FY2018 EPS of $3.80, versus the consensus of $3.84. Wabtec sees FY2018 revenue of $4.1 billion, versus the consensus of $4.13 billion.

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