Wabtec (NYSE: WAB) reported Q2 EPS of $0.87, $0.12 better than the analyst estimate of $0.75. Revenue for the quarter came in at $1.74 billion versus the consensus estimate of $1.7 billion.

• Delivered Strong GAAP Cash Flow from Operations of $311 Million
• Second Quarter Reported GAAP Earnings Per Share of $0.46; Adjusted EPS of $0.87
• Second Quarter Reported GAAP Income from Operations of $159 Million (9.2% Margin); Adjusted Income from Operations of $262 Million (15.1% Margin)
• Over $70 Million in Net Synergies Realized Year-To-Date; On-track to deliver $150 Million Net Synergies in 2020

Rafael Santana, Wabtec’s president and chief executive officer, said: “Wabtec delivered a strong operational quarter despite a difficult and dynamic environment as a result of the COVID-19 pandemic. Against a backdrop of uncertainty and unprecedented challenges, our teams drove strong cash flow from operations, allowing us to further strengthen our financial position. We also continue to make significant progress on our cost and synergy plans, giving us confidence that we will deliver on our synergy targets for 2020, as well as exceed our $250 million synergy run rate ahead of schedule.

“Wabtec will continue to take prudent action to navigate the evolving environment and we remain confident in the long-term fundamentals and strategy for the company. Our strong backlog, recurring service revenues, aftermarket reach, significant installed base, technology differentiation, international footprint and globally diverse business model position the company to deliver long-term sustainable value for our customers, shareholders and employees.”

GUIDANCE:

Wabtec sees FY2020 EPS of $3.50-$3.80, versus the consensus of $3.64. Wabtec sees FY2020 revenue of $7.3-7.6 billion, versus the consensus of $7.54 billion.

• Although significant uncertainty remains surrounding the impact of the COVID-19 pandemic, based upon the Company's operational experience during the first six months of 2020, we have determined to provide certain annual guidance at this time. 2020 financial guidance assumes that there are not material escalations in the severity or duration of the COVID-19 pandemic nor the restrictive measures implemented in response to the pandemic.
• Wabtec provided 2020 sales guidance to a range of $7.3 billion to $7.6 billion, GAAP earnings per diluted share guidance to between $2.05 to $2.35 and adjusted earnings per diluted share to between $3.50 to $3.80. The adjusted guidance excludes estimated expenses for restructuring, transaction and amortization expenses.
• With aggressive cost actions and synergies stemming from the Wabtec and GE Transportation merger on-track, we expect to see a net synergy benefit of over $150 million in 2020. For full year 2020, Wabtec expects cash flow conversion to be greater than 90 percent including over $130 million of cash outflows related to prior restructuring, transaction and litigation costs. Wabtec defines cash conversion as GAAP cash flow from operations divided by GAAP net income plus depreciation and amortization.

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