Freight Sales Drag Down Wabtec's 2nd Quarter Results

Wabtec Corp. reported that sales decreased in the second quarter to $334 million, as 4 percent growth in its Transit Group was wiped out by lower sales in the Freight Group. Growth in transit was mainly due to increased sales of components for subway cars, while freight continued to be affected negatively by the slumping economy and lower rail traffic levels, the Pittsburgh-based supplier said.

During the quarter, the company generated cash from operations of $44 million, or 13 percent of sales. As of June 30, the company said it had cash of $121 million and debt of $352 million. Wabtec said it repurchased 379,700 shares of company stock for $12 million during the quarter.

Based on the financial results and weaker-than-expected conditions in the freight rail market, especially rail traffic and locomotive production, Wabtec updated its 2009 earnings guidance. It said it now expects that revenues will be about 10 percent lower than the $1.58 billion it posted in 2008.

"Despite operating in very difficult market conditions, we posted good results in the second quarter, with strong cash generation and solid strategic progress," said Albert J. Neupaver, Wabtec's president and chief executive officer. "Going forward this year, we expect stability in our transit operations, while the freight businesses will continue to be affected negatively by the global recession. In this environment, we will remain focused on applying lean principles and managing what we can manage in the short term -- especially reducing costs and maximizing cash generation -- while continuing to invest prudently in our long-term growth strategies."