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Wabtec Reports Operating Results (10-Q)

November 02, 2012 | About:
10qk

10qk

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Wabtec (WAB) filed Quarterly Report for the period ended 2012-09-30.

Westinghouse Air Brake Technologies Corp has a market cap of $3.92 billion; its shares were traded at around $82.2 with a P/E ratio of 17 and P/S ratio of 2. The dividend yield of Westinghouse Air Brake Technologies Corp stocks is 0.2%. Westinghouse Air Brake Technologies Corp had an annual average earning growth of 17.2% over the past 10 years. GuruFocus rated Westinghouse Air Brake Technologies Corp the business predictability rank of 4.5-star.

Highlight of Business Operations:

Net sales increased by $88.7 million to $587.6 million from $498.9 million for the three months ended September 30, 2012 and 2011, respectively. The increase is due to sales from acquisitions of $38.4 million; $29.6 million for Remanufacturing, Overhaul and Build sales from increased demand for freight original equipment locomotives and aftermarket services for locomotives; $14.9 million for Specialty Products and Electronics sales from increased demand for freight original equipment rail products, positive train control electronics and aftermarket products; and $10.1 million for Brake Products sales due to higher demand for original equipment brakes. Company net sales decreased $9.2 million and income from operations decreased $1.1 million due to unfavorable effects of foreign exchange. Net income for the three months ended September 30, 2012 was $63.0 million or $1.30 per diluted share. Net income for the three months ended September 30, 2011 was $46.6 million or $0.96 per diluted share.

Selling, general, and administrative expenses increased $2.1 million in the third quarter of 2012 compared to the same period of 2011 primarily due to $5.6 million of expenses from acquisitions and $1.6 million of incentive and non-cash compensation, partially offset by a decrease of $1.6 million for other legal costs and a $3.5 million decrease in selling, general and administrative expenses resulting from cost saving initiatives. Engineering expense increased by $0.9 million in the third quarter of 2012 compared to the same period of 2011 as the company focused engineering resources on product development. Costs related to engineering for specific customer contracts are included in cost of sales. Total operating expenses were 12.7% and 14.4% of sales for the third quarter of 2012 and 2011, respectively.

Net sales increased by $347.7 million to $1,780.7 million from $1,433.0 million for the nine months ended September 30, 2012 and 2011, respectively. The increase is due to higher sales of $162.5 million for Specialty Products and Electronics from increased demand for freight original equipment rail products, positive train control electronics and aftermarket products; $96.6 million from acquisitions; $71.0 million for Remanufacturing, Overhaul Build sales from increased demand for freight original equipment locomotives and aftermarket services for locomotives; $24.1 million for Brake Products sales due to higher demand for original equipment brakes; and $8.6 million for other products primarily from increased international demand. Company net sales decreased $21.0 million and income from operations decreased $2.0 million due to unfavorable effects of foreign exchange. Net income for the nine months ended September 30, 2012 was $187.0 million or $3.85 per diluted share. Net income for the nine months ended September 30, 2011 was $123.9 million or $2.56 per diluted share. Net income increased due to higher sales volume and decreased operating expenses discussed below.

Raw material costs as a percentage of sales were approximately 43% in the first nine months of 2012 and 2011. Labor costs as a percentage of sales were approximately 11% in the first nine months of 2012 and 2011. Overhead costs as a percentage of sales were approximately 17% in the first nine months of 2012 and 2011. Freight Segment raw material costs as a percentage of sales were approximately 44% in the first nine months of 2012 and 2011. Freight Segment labor costs increased as a percentage of sales to approximately 11% in the first nine months of 2012 from 10% in the same period of 2011, and overhead costs as a percentage of sales were approximately 15% in the first nine months of 2012 and 2011. Transit Segment raw material costs decreased as a percentage of sales to

Selling, general, and administrative expenses decreased $5.5 million in the first nine months of 2012 compared to the same period of 2011. The decrease is due primarily due to an $18.1 million charge for a court ruling, partially offset by a benefit of $2.4 million for a settlement related to a prior acquisition which were both recorded in the second quarter of 2011. Increases include $10.8 million of expenses from acquisitions, and $4.3 million of incentive and non-cash compensation. Engineering expense increased by $3.1 million in the first nine months of 2012 compared to the same period of 2011 as the company focused engineering resources on product development. Costs related to engineering for specific customer contracts are included in cost of sales. Amortization expense decreased slightly in the first nine months of 2012 compared to the same period in 2011 due to amortization of intangibles in 2011 associated with acquisitions. Total operating expenses were 12.5% and 15.7% of sales for the first nine months of 2012 and 2011, respectively.

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