Westinghouse Air Brake Technologies Corporation

Lab Tech Q1 2021 Earnings Call. All participants are in listen-only mode. If you need assistance, please signal Conference Specialist by pressing the star key followed by zero. After today's presentation, there will be opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference over to Ms. Christine Gabacki, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Wabtec's first quarter 2021 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 our Investor Relations tab on wabteccorp.com. Some statements we're making today are forward-looking and based on our 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 presentation. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics. I will now turn the call over to Rafael.

Thanks, Christine, and good morning, everyone. We appreciate you joining us today. Turning to slide three, we continue to see a recovery across the global freight and transit rail markets with North American freight volumes and equipment utilization sequentially improving in the first quarter and investments in transit infrastructure continuing. These directional trends, along with the focused performance of our team, and execution against our strategic plan are reflected in our first quarter results. Total sales for the quarter were $1.8 billion. This was largely driven by international freight markets, services, and a recovery in transit, but offset by continued weakness in the North America OEN market. Adjusted operating margin was 15.1%, driven by lean initiatives, cost actions, and favorable mix from mining and mods. Cash conversion was strong with cash flow from operations of $292 million. Cash generation was due in large part to good working capital management, allowing us to deliver on our financial priorities, including strategic acquisition of NorthCo, which I'll touch up on more in a moment. Total multi-year backlog was $21.7 billion, up sequentially over the prior quarter, providing us better visibility into 2021 and beyond. Overall, we ended the quarter with adjusted EPS of 89 cents, a strong reinforcement that our teams are continuing to take the necessary steps to control what we can, deliver long-term growth of the company, and increase shareholder value. In the area of synergies, we're on track to deliver the full run rate of $250 million in synergies this year, and we have positioned the company for long-term profitable growth. In the first quarter, we exited all shared service agreements stemming from the GE transportation merger ahead of schedule. This was a tremendous execution by the team on a complex transaction. In addition, we continue to take aggressive actions on structural costs. This includes reducing total operational square footage by 5% since January of last year, and we will further reduce our square footage by an additional 2% for the remainder of 2021. Moving forward, we'll continue to drive additional cost reductions through lean initiatives, and balance our focus on execution with strategic investments in high return opportunities that drive long-term profitable growth. You saw that with our recent acquisition of Nordco, which is a leader in the maintenance of waste space with 60% of its revenues coming from aftermarket services and a significant stall base of over 5,000 units. We really like this business and its leading-edge technologies. It opens up significant opportunities to expand domestically and internationally in the growing maintenance away segment, while driving long-term profitable growth. Integration activities are already underway, and we expect this strategic acquisition to be a creative to earnings, cash flow, and return on investment capital in 2021. On the commercial front, we're also focused on driving growth and won some key orders in the quarter despite a challenging environment. This included a significant deal for our FDL Advantage product, which is a fuel upgrade kit. As we have shared before, there are more than 10,000 FDL locomotives running globally. With this next-gen technology, we're opening up a multimillion-dollar pipeline of opportunity that is helping customers drive down fuel consumption by up to 5%, as well as drive down emissions. That means for a single locomotive burning 250,000 gallons of fuel, it can translate into $25,000 in savings per year. Also, when it comes to technology differentiation, and sustainable transportation, we completed a significant operational milestone with our FlexDrive battery electric locomotive, testing it in revenue services with BNSF across more than 13,000 miles of track. Through this demonstration, the FlexDrive was able to reduce both fuel consumption and emissions by more than 11%, a game changer in decarbonizing rail. We continue to see growing interest in this next-gen technology from customers in both North America and internationally. And we expect our battery electric locomotive to become an important area of growth for the company over the long term. In digital and electronics, we're also leading the way in rail safety and utilization. We closed the key order for positive train control internationally and we are encouraged by the strong order pipeline for international PTC expansion. Finally, we had a solid quarter in transit, winning new brakes, doors, and HVAC contracts in India, Taiwan, and France, including a significant order for platform doors and gates at over 30 train stations in Marseille. Overall, Our order pipeline continues to strengthen, driven by multi-year orders in freight services, equipment, and digital electronics. Based on this stature and orders, Wabtec is in a strong position to drive profitable growth and perform for our shareholders, for our customers, and for our employees. With that, I'll turn the call over to Pat, who will review the quarter segment performance and our overall financial position.