Wabtec Corporation (NYSE:WAB) Q3 2019 Earnings Conference Call - Final Transcript

Oct 31, 2019 • 11:00 am ET

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Wabtec Corporation (NYSE:WAB) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. Welcome to the Wabtec Corp. Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Kristine Kubacki, the VP of Investor Relations. Please go ahead.

Executive
Kristine Kubacki

Thank you, Debbie. Good morning, everyone, and welcome to Wabtec's third quarter earnings call.

With us today are President and CEO, Rafael Santana; CFO, Pat Dugan; and Corporate Controller, John Mastalerz.

Before we start, I would like to point out a change to today's call. Based on feedback we received from you and our desire to drive continuous improvement, we will be sharing a slide presentation to support our discussion today during today's call. This 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.

As such, 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 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.

And now I will turn over the call to Rafael.

Executive
Rafael Santana

Thanks, Kristine, and good morning, everyone. Thanks for joining us.

Today, I'll share some thoughts on our third quarter performance and strategic priorities for the remainder of the year, then Pat will cover the quarter in greater detail as well as an overview of both our Freight and Transit segments and our overall market dynamics.

As you can see on Slide 3 of the presentation, our third quarter results were on track and we're well positioned to deliver the continuous strong performance, with sales of over $2 billion due to strength in our service businesses, continued growth in our international markets as well as the Transit segment. Our aftermarket offerings continue to be a stable and profitable parts of our portfolio as well as a key differentiator as we partner with customers over the life cycle of their equipment.

This includes our successful modernization program, which closed a significant milestone, which was a first-of-a-kind international mods order in the third quarter. We have also seen growth in Transit's aftermarket sales, which contributed to the overall Transit sales growth year-over-year.

In line with our goal to drive continued margin expansions, we saw improvement in our adjusted consolidated margin as a result of a higher freight mix in aftermarket, along with early traction on our synergy and cost actions. We will continue to take action on improved project execution, and we remain laser-focused on the prioritization of resources and prudent capital allocation.

Cost reductions and synergy actions stemming from the Wabtec and GE Transportation merger are also ahead of plan. This is the result of several actions, including a reduction of direct and indirect spend, efforts to consolidate over a million square feet across of our facility footprint, and the