Westinghouse Air Brake Technologies Corporation

Good morning and welcome to WebTech Quarterly Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Christine Kabaki, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Wabtec's third quarter 2020 earnings call. With us today are President and CEO Rafael Santana, CFO Pat Dugan, and Senior VP of Finance, John Mastelers. Today's slide presentation, along with our earnings release and financial disclosures, were posted on our website earlier today and can be accessed on the Investor Relations tab on wabtechcorp.com. Some statements we're making are forward-looking and based on the best view of the world and our business today. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentations. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics. And now I will turn the call over to Rafael.

Thanks, Christine, and good morning, everyone. We appreciate you joining us today. I hope you and your families remain healthy and safe. Turning to slide three, while we continue to see the impact of COVID globally, A gradual recovery across the global freight and transit rail markets is continuing. North America freight volumes and equipment utilization sequentially improved in the third quarter, and transit ridership is also slowly resuming. These directional trends, along with the focused performance of our teams, are reflected in our third quarter results. Total sales for the quarter were $1.9 billion, driven largely by international freight markets and the recovery in transit, but offset by global disruption due to the COVID pandemic. Total adjusted operating income was $293 million, impacted primarily by the drop in freight sales, but somewhat offset by a more than 20% increase in transit segment income. Adjusted operating margin was 15.7%, driven by cost actions and execution on our synergies, as well as margin improvement in transit, which was up 270 base points for the quarter due to synergies, improved productivity, and better project execution. In third quarter, we had a solid cash conversion with cash flow from operations of $230 million, driven by good working capital management. This allowed us to further strengthen the balance sheet by reducing debt by over $200 million in the quarter. Our liquidity position remains strong at $1.9 billion. Total multi-year backlog was over $21 billion, despite current market conditions. Finally, we ended up the quarter with adjusted EPS of 95 cents Part of reinforcing that our teams are continuing to take the necessary steps to control what we can, protect the long-term growth of the company, and deliver shareholder value. In the area of synergies, we are accelerating our progress, and we are on track to deliver $150 million of net synergies in 2020, as well as deliver on the full run rate of $250 million in synergies before the end of 2022. To achieve these goals, we continue to take actions on structural cost, and in the third quarter, we further reduced headcount by another 3%, taking our total reductions to roughly 13% year-over-year. We also have reduced our operational footprint year-over-year, and we are actively driving cost reductions through lean initiatives. To date, we have exited about 75% of the shared services from GE Transportation merger ahead of the schedule, and we are on track to exit over 90% of these activities by year end. Overall, our team delivered a strong quarter in a challenging and dynamic environment and won several orders. including a significant deal with New York City Transit to extend battery technology to passenger transit and drive down emissions. This is a key win that directly aligns with our own sustainability strategy, as we outlined in our 2020 sustainability report issued earlier this week. We also closed $160 million multi-year mining order for advanced drive systems, our single largest mining order to date. In digital electronics, we won our first order with the Class 1 railroads for our advanced trip optimizer zero to zero solution. This deal will reduce emissions and will drive increased fuel savings and is another significant step towards autonomous rail. Finally, we had a solid quarter in transit, winning new brakes, doors, and HVAC contracts in Australia, Germany, France, and the UK, as well as our first order for the metro industry's most advanced braking system, the Metroflex, in Asia. Looking ahead, the rail transportation market continues to recover from trough levels in the second quarter, We are encouraged by the absence of a recovery, as noted by the ongoing improvement in our international freight markets, the sequential improvement in North America rail volumes, and increasing global transit activity. With that, I'll turn the call over to Pat, who will share more on the quarter segment performance and our overall financial position. Pat?