Wabtec’s fourth quarter net profit climbs on rising gross margin
rail technology provider Wabtec saw net income for the fourth quarter of 2021 increase 116% to $190 million, or $1.02 per diluted share, from $88 million, or 46 cents per diluted share, in the fourth quarter of 2020.
Adjusted earnings per diluted share were $1.18, 20.4% higher than year over year.
A higher gross margin in the fourth quarter, due to higher sales as well as lower cost of sales, contributed to the higher net profit in the fourth quarter. Gross profit increased 29% to $652 million from $506 million in the fourth quarter of 2020. Net sales for the fourth quarter of 2021 were $2.07 billion from $2.02 billion in the fourth quarter of 2020, while cost of sales for the fourth quarter of 2021 was $1.4 billion, compared to $1.5 billion in the fourth quarter of 2020.
Operating expenses were $388 million, compared to $345 million year-over-year.
“The Wabtec team delivered strong execution to close out the year, giving us momentum into 2022,” Chairman and CEO Rafael Santana said in a statement. “Our productivity initiatives, realization of synergies and positive mix drove improved segment margins for both the fourth quarter and full year despite increasing supply chain disruptions and rising costs. “
Freight segment sales rose 6.4% to $1.4 billion on demand for services and components as well as the acquisition of track maintenance equipment maker Nordco. Lower locomotive deliveries and increased supply chain disruptions offset these gains.
Transit segment sales fell 5.4% to $648 million due to supply chain issues, COVID-related disruptions and an unfavorable exchange rate, Wabtec (New York Stock Exchange: WAB) noted.
Wabtec’s 12-month backlog increased 13.5% in 2021 to nearly $6.3 billion, compared to $5.5 billion for 2020, primarily due to increased orders for freight equipment and freight services.
As Wabtec looks to 2022, it gave a sales forecast of between $8.3 billion and $8.6 billion, compared to net sales of $7.8 billion in 2021 and nearly $7.6 billion in 2020. Adjusted earnings per diluted share should be around $4.65. at $0.5.05, up from $24.26 for 2021.
On an earnings call with investors on Wednesday, executives said an expected increase in industry-wide railcar deliveries would provide support in 2022, while inflation and rising utility costs materials could be a potential headwind for the year.
Meanwhile, as the freight rail industry considers alternative fuel locomotives, the transition could be ‘evolutionary’ versus ‘revolutionary’ as transition technologies can be applied to an existing fleet and may be less disruptive for operations, according to Santana. These next-generation locomotives could also be deployed in a hybrid composition or in tandem with other technologies that enable greater fuel or operational efficiency.
“It’s going to be more scalable as we get to the next two years,” Santana said.
This year alone, Wabtec and Union Pacific (NYSE:UNP) announced that UP will acquire 10 battery-electric locomotives from Wabtec as part of a plan to test 20 battery-electric locomotives in rail yards in California and the United States. Nebraska.
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