Wabtec Corporation is one of North America's largest providers of value-added technology-based products and services for the rail industry. Through its subsidiaries the company manufactures a full range of products for locomotives freight cars and passenger transit vehicles. The company also builds new locomotives up to 4000 horsepower and providesaftermarket services including locomotive and freight car fleet maintenance. (PRESS RELEASE) Wabtec has a market cap of $1.8 billion; its shares were traded at around $37.55 with a P/E ratio of 13.9 and P/S ratio of 1.2. The dividend yield of Wabtec stocks is 0.1%. Wabtec had an annual average earning growth of 33.8% over the past 5 years.
Highlight of Business Operations:comprised of the $5.6 million for employee severance costs for approximately 400 salaried and hourly employees; $5.5 million of pension and postretirement benefit curtailment for those employees; $4.8 million related to asset impairments for structures, machinery, and equipment; and $0.6 million for goodwill impairment. The goodwill impairment was recorded as amortization expense and most of the other charges were recorded in cost of sales. Severance costs are contractual liabilities and payment is dependent on the waiver by or expiration of certain seniority rights of those employees. As of March 31, 2009, $3.7 million of this amount had been paid.
Freight Group sales decreased by $11.8 million or 6.2% primarily due to decreased sales of $22.2 million for brake products, $21.6 million for freight electronics and specialty products, and $2.4 million for remanufacturing, overhaul and build of locomotives. Offsetting those decreases were increases of $33.2 million from acquisitions and $7.5 million for other products. For the Freight Group, net sales were reduced by $6.3 million of the total impact due to unfavorable effects of foreign exchange on sales mentioned above.
Transit Group sales increased by $6.4 million or 3.3% primarily due to increased sales of $15.9 million for brake products, $11.5 million for other transit-related products for certain transit contracts and $7.4 million from acquisitions. Offsetting those increases was a decrease of $12.1 million for remanufacturing, overhaul and build of locomotives. For the Transit Group, net sales were reduced by $16.3 million of the total impact due to unfavorable effects of foreign exchange on sales mentioned above.
Investing activities Cash provided by investing activities in the first three months of 2009 was $0.2 million as compared to cash used for operations of $3.8 million for the same period of 2008. Capital expenditures were $3.4 million and $3.9 million in the first three months of 2009 and 2008, respectively. During the quarter ended March 31, 2009 the Company sold a facility for net cash proceeds of $3.6 million to an unrelated third party. While certain portions of the building are being leased back, this transaction resulted in a gain of $2.1 million and deferred gain of $0.6 million. The deferred gain will be recognized over five years.
Financing activities In the first three months of 2009, cash used by financing activities was $33.0 million, which included $23.0 million of debt repayments and $6.0 million in proceeds from debt on the revolving credit facility, $8.1 million of debt repayments on the term loan and other debt, $0.5 million of dividend payments and $7.3 million for the repurchase of 290,000 shares of stock. In the first three months of 2008, cash used for financing activities was $24.6 million, which included $0.4 million of proceeds from the exercise of stock options and other benefit plans, offset by $0.5 million of dividend payments and $24.5 million for the repurchase of 712,900 shares of stock.
On July 31, 2006, the Board of Directors authorized the repurchase of up to $50 million of the Companys outstanding shares. On February 20, 2008, the Board of Directors authorized the repurchase of up to an additional $100 million of the Companys outstanding shares. During the first quarter of 2008, the Company completed the $50 million authorization made in 2006. Cumulative purchases under both plans have totaled $89.8 million, leaving $60.2 million under the authorization.
Read the The complete ReportWAB is in the portfolios of John Keeley of Keeley Fund Management, Ron Baron of Baron Funds.