PITTSBURGH - Wabtec Corporation (NYSE: WAB) has reported a significant increase in its second-quarter earnings, surpassing analyst expectations. The company's adjusted earnings per share (EPS) rose by 39.0% to $1.96, exceeding the analyst estimate of $1.88. This earnings beat has prompted a positive market response, with Wabtec's shares moving up by 1.2%.
Wabtec's robust performance is attributed to a 9.8% increase in sales, reaching $2.64 billion, which aligns with the consensus estimate. The growth was driven by higher sales in both Freight and Transit segments, with the Freight segment experiencing a notable 13.1% sales increase.
Rafael Santana, Wabtec’s President and CEO, credited the strong quarter to robust sales and earnings growth, as well as the company's focus on executing against its second-half deliverables. Santana remained confident in Wabtec's ability to drive profitable growth, consistent with their long-term guidance.
The company's GAAP operating margin improved to 16.3%, and the adjusted operating margin increased by 2.9 percentage points to 19.3%. These margins benefited from higher sales and improved gross margins. Additionally, Wabtec's GAAP diluted EPS soared by 54.7% compared to the same quarter last year.
Looking ahead, Wabtec has raised and tightened its 2024 adjusted EPS guidance to a range of $7.20 to $7.50, with the midpoint of $7.35 reflecting an uptick of 24.2% from 2023 and slightly below the analyst consensus of $7.39. The company's revenue guidance for the full year remains unchanged at $10.25 billion to $10.55 billion, with the midpoint of $10.4 billion slightly above the analyst consensus of $10.38 billion.
Wabtec's cash flow from operations was $235 million, a substantial improvement from the $115 million reported in the year-ago period, primarily due to higher net income and improved working capital. The company also returned $235 million to shareholders through share repurchases and dividends during the quarter.
The company's backlog provides strong visibility, with the 12-month backlog at June 30, 2024, standing at $114 million higher than the prior year period. However, the multi-year backlog was $356 million lower than the previous year, with a slight decrease of 0.6% when excluding foreign currency exchange.
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