Westinghouse Air Brake Technologies Corporation

Good day and welcome to the Wabtec first quarter 2022 earnings conference call. All participants will be in a 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 a touch tone phone. 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 Christine Kubacki, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Wabtec's first quarter 2022 earnings call. With us today are President and CEO Rafael Santana, CFO John Olin, and Senior Vice President 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 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. Let's move to slide four. I'll start with an update on our business, my perspectives on the quarter, and progress on our long-term value framework. John will then cover the financials. Overall, we achieved significant progress against our long-term strategies that we detailed at our investor day in March. We delivered a strong first quarter as shown by the 5% sales growth, adjusted operating margin expansion of 1.4 percentage points, and adjusted earnings per share growth of 27%. Total cash flow from operations was 161 million. Finally, We ended the quarter with about $23 billion of multi-year backlog, which was up $1.1 billion from last year. Overall, our team overcame a volatile and disruptive environment and delivered a strong first quarter despite challenges across the supply chain, higher costs, and the impact from the conflict in Ukraine. We are monitoring the devastating situation in Ukraine Our hearts go out to the people there. Their resilience and courage are truly inspirational. For the year, we expected Russia to account for roughly 5% of our earnings. We do not expect our business in that market to return for the remainder of the year. Given the situation, our first priority is to continue to protect the safety of our employees in the region and abide by all sanctions. On the positive side, we do believe that the rail industry and WAPTEC are well poised to benefit from significantly higher energy prices and from the likelihood of shifting global commodity flows over the medium term. Rail's significant fuel advantage over truck is only widening with rising fuel prices, improving the value proposition for rail. We are enhancing our customers' productivity, capacity utilization, and safety through investments in decarbonization and digital technologies. The breadth of our portfolio, along with our unmatched technologies and deep expertise, means our order pipeline continues to strengthen and our visibility beyond 2022 continues to increase. Our confidence in our company's future is reflected in our first quarter purchase of $296 million of Wabtec stock and in the increase of our first quarter dip then by 25%. Shifting our focus to slide five, let's talk about end market conditions in more detail. As we look at key metrics across our freight businesses, we are encouraged by the underlying momentum of our industry. Many key metrics are improving with the exception of North American car loads. Despite this low start, we expect car loads to improve as the year progresses. Locomotive parkings continue to decline despite weaker freight traffic in the quarter. We expect demand for reliability, productivity, and fuel efficiency to continue to increase, placing our services business and modernization portfolio in a position of strength. When it comes to the North American railcar built, demand for railcar is increasing, from what we believe are trough levels. Rail cars in storage are below pre-COVID levels with about 18% of the North American rail car fleet in storage. As a result, industry orders for new rail cars continue to improve. The industry outlook for 2022 is for over 40,000 cars to be delivered. Internationally, Freight activity continued to show growth in the first quarter across many of our major markets, and our order pipeline remains strong. We expect long-term revenue growth in the majority of our end markets. Transitioning to the transit sector, ridership trends continue to be uneven in various markets. However, infrastructure spending for green initiatives continue to be a bright spot, especially as governments globally invest in rail for clean, safe, and efficient transportation. Overall, the long-term market drivers for passenger transportation remain positive. Next, let's turn to slide six. When it comes to the long-term shareholder value, we are continuing to drive progress against our value creation framework. which is anchored around five key growth strategies. This includes accelerating the creation of innovative and scalable technologies and using these technologies to grow and refresh our expansive global install base, leading the decarbonization of rail, expanding high margin recurring revenue streams, which reduces our exposure to economic and industry cycles, and most importantly, driving continuous operational improvement, and we are making strong progress against this strategy. In the first quarter, we won several strategic orders, including our largest digital order in India for online monitoring of rolling stock. This new automated system is part of Indian Railways' Smart Yard initiative, and it will improve the availability of the railway's fleet of coaches, wagons, and locomotives. We also won key digital orders with Class 1s for our next generation dispatch offering, as well as a fleet-wide PTC hardware upgrade. We also secured a strategic order for 330 locomotive modernizations with North Polk Southern, and we've introduced a new locomotive model to Brazil's freight rail market with deliveries to Rumo, MRS, and Suzano. Finally, we launched our Integration 2.0 restructuring program, which as we outlined at our recent investor day, will drive continued footprint rationalization as well as manufacturing and engineering efficiencies across our operations. Through these efforts, we expect to deliver between $75 to $90 million of additional run rate savings by 2025 and position Wabtec for continued growth. With that, I'll turn the call over to John to review the quarter segment performance and our overall financial position.