Wabtec reported higher third-quarter revenue and earnings and raised its outlook as the company’s freight and transit equipment backlogs grew.
Operating income increased 27%, to $625 million, as revenue grew 8%, to $3.12 billion, the company said Wednesday. Earnings per share increased 34%, to $2.42. Wabtec (NYSE: WAB) raised its full-year adjusted EPS guidance to a range of $10.85 to $11.05, an increase of 21% to 23.2%, up from the prior outlook of an increase of 18.2% to 21.5%.
“The strength of our performance reflects our momentum across the portfolio, disciplined execution by our teams, and the continued success of our strategic actions. These actions enhance our growth profile, expand margins, and increase the earnings power of the company,” Chairman and Chief Executive Rafael Santana said in a release. “Our teams continue to translate healthy customer demand into profitable growth while investing in technologies that will advance the future of transportation. These investments are strengthening our competitive position and reinforcing Wabtec as a leading industrial technology company.”
Freight segment revenue increased 6.9% in the quarter, with digital intelligence revenue up 24.2% thanks to Wabtec’s acquisition of Frauscher Sensor Technologies and what it said was strong demand.
Wabtec received new locomotive and modernization orders worth $633 million from two Class I railroads. It did not name the railroads.
Growth in North American freight traffic this year has prompted Class I railroads to reactivate stored locomotives, which has led to increased parts orders, Santana told investors and analysts on the company’s earnings call. But Wabtec has yet to see the volume growth translate into orders for new locomotives, he said.
The Freight segment’s 12-month backlog rose 7.5% from a year earlier, to $6.54 billion.
Transit segment revenue increased 11.3%, to $883 million, driven by the acquisition of Dellner Couplers of Sweden and higher original equipment and aftermarket sales. The Transit segment’s 12-month backlog increased 12.2%, to $2.45 billion.
Why it matters: Wabtec’s third-quarter report shows a recovery in railroad equipment use without yet signaling a broad rebound in new-equipment spending.
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