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Wabtec Reports Operating Results (10-Q)

May 09, 2011 | About:
10qk

10qk

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Wabtec (WAB) filed Quarterly Report for the period ended 2011-03-31.

Wabtec Inc. has a market cap of $3.29 billion; its shares were traded at around $68.66 with a P/E ratio of 24.79 and P/S ratio of 2.19. The dividend yield of Wabtec Inc. stocks is 0.06%. Wabtec Inc. had an annual average earning growth of 17% over the past 10 years.

Highlight of Business Operations:

Freight Group sales increased by $99.7 million, or 60.4%, due to higher sales of $62.9 million for electronics and specialty products, $22.1 million from acquisitions and $12.2 million for brake products. For the Freight Group, net sales were increased by $2.9 million due to favorable effects of foreign exchange on sales mentioned above.

Transit Group sales decreased by $8.4 million, or 4.2%, due to lower brake product sales of $8.7 million, lower transit related product sales of $8.5 million, and other lower sales of $5.5 million from remanufacturing, overhaul and build of locomotives, partially offset by sales from acquisitions of $12.3 million. Transit Group sales are lower due in part to the completion of major contracts, as well as project delays and budget constraints at municipal transit authorities. For the Transit Group, net sales were increased by $0.4 million due to favorable effects of foreign exchange on sales mentioned above.

Gross profit Gross profit, which is dependent on a number of factors including pricing, sales volume and product mix, increased to $133.2 million in the first quarter of 2011 compared to $108.4 million in the same period of 2010. Gross profit, as a percentage of sales, was 29.3% for the first quarter of 2011 compared to 29.8%, for the first quarter of 2010, because of sales volume and mix of products. The provision for warranty expense is generally established for specific losses, along with historical estimates of customer claims as a percentage of sales, which can cause variability in warranty expense between quarters. Warranty expense was $1.8 million higher in the first quarter of 2011 compared to the same period of 2010 due to increased Freight Group sales. The warranty reserve recorded on the balance sheet was $21.2 million higher at March 31, 2011 compared to March 31, 2010. This is a result of higher warranty expense driven by higher sales and lower claims actually satisfied and $13.4 million from first quarter 2011 acquisitions. In particular, certain Transit Group warranty reserves reflect provisions established for original equipment deliveries in 2010.

Operating activities In the first three months of 2011 and 2010, cash provided by operations was $16.5 million and $12.4 million, respectively. In comparison to first three months of 2010, cash provided by operations in 2011 resulted from higher net income and higher non-cash items, partially offset by a net increase in working capital. In 2011, accounts receivable increased by $35.9 million, primarily due to higher sales and inventory increased by $21.4 million from the prior year. Accounts payable decreased by $4.0 million. All other operating assets and liabilities, net, provided cash of $23.4 million due primarily to the payment timing of certain accrued liabilities. In 2010, accounts receivable increased by $34.9 million and inventory increased by $3.8 million from the prior year. These increases were partially offset by an increase in accounts payable of $2.5 million. All other operating assets and liabilities, net, provided cash of $8.6 million due primarily to the payment timing of certain accrued liabilities.

Investing activities In the first three months of 2011 and 2010, cash used in investing activities was $38.4 million and $41.2 million, respectively. Net cash paid for acquisitions was $31.0 million and $39.9 million for the first three months of March 31, 2011 and 2010, respectively. Refer to Note 3 of the Notes to Consolidated Financial Statements for additional information on acquisitions. Capital expenditures were $7.4 million and $3.6 million in the first three months of 2011 and 2010, respectively.

Financing activities In the first three months of 2011, cash used in financing activities was $20.6 million, which included $45.0 million in proceeds from debt and $47.0 million of repayments of debt on the revolving credit facility, $20.0 million of debt repayments on the term loan and other debt and $0.5 million of dividend payments. In the first three months of 2010, cash provided by financing activities was $27.1 million, which included $111.0 million in proceeds from debt and $67.0 million of repayments of debt on the revolving credit facility, $16.3 million of debt repayments on the term loan and other debt, $0.5 million of dividend payments and $3.1 million for the repurchase of 75,000 shares of stock.

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10qk
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