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/// On Track For Long-T erm Growth I n v e s t o r P r e s e n t a - - PowerPoint PPT Presentation

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/// On Track For Long-T erm Growth I n v e s t o r P r e s e n t a t i o n novembre 10, 2016 /// November 2017 /// FORWARD-LOOKING STATEMENTS Statements contained in this presentation, which are not historical facts, are forward-looking

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novembre 10, 2016

/// November 2017

/// On Track For Long-T erm Growth

I n v e s t o r P r e s e n t a t i o n

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2 /// Investor Presentation, November 2017

Statements contained in this presentation, which are not historical facts, are forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. This presentation contains forward-looking statements and certain information contained in this presentation involves risks and uncertainties that could result in actual results differing materially from expected results. Forward-looking statements represent the Company’s expectations and beliefs concerning future events, based on information available to the Company as of the date of this

  • presentation. The Company undertakes no obligation to publicly update or revise any forward-looking

statements to reflect events or circumstances that may arise after the date of this presentation. Additional information regarding these and other factors is contained in the Company’s SEC filings, including without limitation, the Company’s Form 10-K and Form 10-Q filings.

/// FORWARD-LOOKING STATEMENTS

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3 /// Investor Presentation, November 2017

/// A DIVERSE, GLOBAL RAIL INDUSTRY LEADER…

  • History dates to 1869 when George Westinghouse invented air brakes
  • A leading global provider of equipment, systems and value-added services for transit and

freight rail, strengthened by acquisition of Faiveley Transport

  • Large, global installed base with operations in 30+ countries; sales in more than 100
  • Diversity of revenue base across markets, products and geography offsets cyclicality of

U.S. freight market

  • Strong platform of product and service capabilities in key global markets offers stability

and growth opportunities

  • World-class lean manufacturing, process excellence and continuous improvement
  • 16% EPS CAGR since 2006
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4 /// Investor Presentation, November 2017

$ millions, unless indicated 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9 Mos. 2017* Sales $1,088 $1,360 $1,575 $1,402 $1,507 $1,968 $2,391 $2,566 $3,044 $ 3,308 $2,931 $2,806 Income from Operations $ 130 $ 180 $ 213 $ 180 $ 203 $ 281 $ 392 $ 437 $ 527 $ 608 $ 513 $ 375 Operating Margin 11.9% 13.2% 13.5% 12.8% 13.5% 14.3% 16.4% 17.0% 17.3% 18.4% 17.5% 13.4% Net Income $ 85 $ 110 $ 131 $ 115 $ 123 $ 180 $ 252 $ 292 $ 352 $ 399 $ 352 $ 243 Diluted EPS from

  • cont. ops ($)

$ 0.88 $ 1.12 $ 1.34 $ 1.20 $ 1.28 $ 1.86 $ 2.59 $ 3.01 $ 3.62 $ 4.10 $ 3.85 $ 2.52 Cash from

  • perations

$ 151 $ 143 $ 159 $ 161 $ 176 $ 249 $ 237 $ 236 $ 472 $ 448 $ 449 $ 26 Debt net of cash $ (38) $ (85) $ 245 $ 203 $ 185 $ 109 $ 101 $ 165 $ 94 $ 267 $ 1,500 $1,646

* Excludes expenses related to Faiveley Transport acquisition and other adjustments

/// …WITH SUCCESSFUL TRACK RECORD

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5 /// Investor Presentation, November 2017

  • Expected long-term annual synergies of at least $50M to be achieved by year three
  • Supply chain efficiencies
  • Review of operations for efficiency and cost savings; operational excellence
  • Leveraging SG&A capabilities
  • Estimated synergies of about $15-20M in first year with estimated one-time costs of

$8-10M; to achieve at least $50M in annual synergies by year three will require additional restructuring and one-time costs

  • Significant long-term growth opportunities
  • Complementary geographic presence, products and engineering activities creates

global scale and expertise

  • Strengthens technology and innovation initiatives to improve ability to offer safety,

productivity and efficiency enhancements

  • Expands product and service capabilities in key global markets with blue-chip,

global customers

/// ACQUISITION OF FAIVELEY TRANSPORT CREATES OPPORTUNITIES FOR SYNERGIES, GROWTH

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6 /// Investor Presentation, November 2017

  • Al Neupaver remains WAB Chairman
  • Ray Betler remains WAB President and CEO
  • Stéphane Rambaud-Measson is now a WAB Executive Vice President and Chief

Operating Officer, reporting to Ray Betler

  • Faiveley Transport’s headquarters will remain near Paris, France and will be the

headquarters of Wabtec's Transit Group

  • Wabtec's Transit Group encompasses all of Wabtec's worldwide transit activities, with

combined revenues exceeding $2 billion

/// EXPERIENCED MANAGEMENT TEAM

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7 /// Investor Presentation, November 2017

/// DIVERSIFIED REVENUE BASE

SEGMENT GEOGRAPHY MARKET

Freight 35% Transit 65% US 35% Rest of the world 65% OEM 43% After- market 57%

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8 /// Investor Presentation, November 2017

/// COMPELLING INDUSTRY DYNAMICS

Source: World Rail Market Study 2016 - UNIFE/ Roland Berger.

  • Global, accessible rail supply market exceeds $100 billion annually, with average

annual growth of about 3% through 2021

  • New rolling stock expected to grow at 3.5% CAGR, mainly in Europe (high-speed,

very high-speed and urban segments)

  • Services expected to grow at 3.1% CAGR, mainly in Asia Pacific (driven by growth
  • f installed base in recent years)
  • Secular trends also driving investment
  • Urbanization
  • Focus on safety
  • Awareness of environmental issues/benefits
  • Efficient transportation system/infrastructure essential to global economic growth in

developed, emerging countries

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9 /// Investor Presentation, November 2017

  • Overall economic activity (GDP) drives freight traffic volumes and capital investment
  • NAFTA sets technology standards
  • Majority of rolling stock outside of NAFTA, where Wabtec share is smaller
  • Headwinds in new locomotive and freight car markets continue in 2017

/// FREIGHT SEGMENT

Source: World Rail Market Study 2016 - UNIFE/ Roland Berger.

NAFTA 25% Asia - Pacific 32% Russia - CIS 17% Europe 18% Other 8%

Locomotives

(Global installed base of ~ 114,000)

NAFTA 37% Asia - Pacific 20% Russia - CIS 26%

Europe 12%

Other 5%

Freight Cars

(Global installed base of ~ 5.5 million)

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10 /// Investor Presentation, November 2017

/// FREIGHT SEGMENT : Locomotive

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11 /// Investor Presentation, November 2017

/// FREIGHT SEGMENT : FreightCar

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12 /// Investor Presentation, November 2017

  • Overall markets driven by government funding and ridership levels, with Europe setting

technology standards

  • Europe/Asia Pacific significantly larger than NAFTA; Faiveley Transport strengthens

Wabtec share in these markets

  • Strongest growth through 2021 expected to be in Western Europe (Germany, France,

UK) and Asia Pacific (India, Australia)

  • Record backlog in 2017

/// TRANSIT SEGMENT

NAFTA 5% Asia – Pacific 43% Russia - CIS 14% Europe 32% Other 6%

Source: World Rail Market Study 2016 - UNIFE/ Roland Berger.

Transit Cars

(Global installed base of ~ 569,000)

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13 /// Investor Presentation, November 2017

/// TRANSIT SEGMENT : Transit Cars

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14 /// Investor Presentation, November 2017

/// TRANSIT SEGMENT : Buses

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15 /// Investor Presentation, November 2017

(Actual Performance, 2006-16: Sales growth CAGR of 10% • EPS growth CAGR of 16%)

/// WABTEC’S VISION FOR THE FUTURE

TO AVERAGE DOUBLE-DIGIT EP S GROWTH THROUGH THE BUSINES S C YC LE

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16 /// Investor Presentation, November 2017

Wabtec Excellence Program drives

  • ur investment in these Growth Strategies:

/// PERFORMANCE-DRIVEN GROWTH STRATEGIES

PRODUCT INNOV A TION & NEW TECHNOLOGIES GLOBAL AND MARKET EXP ANSION AFTERMARKET PRODUCTS AND SERVICES ACQUISITIONS

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17 /// Investor Presentation, November 2017

/// WABTEC EXCELLENCE PROGRAM

D r i v e s T h e B u s i n e s s

  • Goal to generate more

cash from operations than net income annually

  • Corporate Business

Councils foster culture

  • f continuous

improvement in all key processes and disciplines, including lean manufacturing, supply chain, quality and innovation

  • Drives cash flow,

reduces costs and improves efficiency to help manage through cycles

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18 /// Investor Presentation, November 2017

/// PRODUCT INNOVATION AND NEW TECHNOLOGIES

  • Product breadth and engineering expertise provide unique ability to help customers

use technology to improve safety, productivity and efficiency

  • Continued investment to expand capabilities in signaling and train control, an annual

global market of about $20B

  • Increased focus on innovation and R&D by leveraging global footprint for

best-in-class engineering solutions

  • More than 20 Centers of Competence with specialized expertise
  • Nearly 1,500 engineers worldwide
  • More than 4,000 active patents; nearly 100 annual new applications
  • A leading innovator in brakes, electronics, doors and HVAC, with an active pipeline of

new products and upgrades

  • Signaling and train control, Tier IV cooling systems, oil-free compressors,

axle-mounted brake discs

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19 /// Investor Presentation, November 2017

/// GLOBAL AND MARKET EXPANSION

  • Expanded geographic platforms in key transit markets
  • Stronger presence in Europe, Asia Pacific (especially India and China)

and South Africa

  • New, state-of-the-art production facility in Czech Republic
  • Freight market opportunities in key natural resources markets
  • Selective opportunities in adjacent markets where we offer competitive advantages
  • About 10% of sales (power generation and other industrial)
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20 /// Investor Presentation, November 2017

/// AFTERMARKET PRODUCTS AND SERVICES

  • Expanded installed base of OEM products globally due to Faiveley Transport acquisition

provides additional aftermarket opportunities

  • New service center capabilities in key growth markets worldwide
  • Focus on less cyclical MRO segment
  • Capitalize on larger installed base globally
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21 /// Investor Presentation, November 2017

/// ACQUISITIONS

  • Strategic, selective acquisitions in core or adjacent markets that add to Wabtec’s

differentiation and/or help to dampen cyclicality

  • Financial criteria: Goal of accretion in first year, with positive and sustainable impact
  • n economic profit
  • Completed 50+ transactions in the last 10 years, in support of corporate growth

strategies

  • Product extensions in core, adjacent markets
  • New technologies, engineering capabilities
  • Expanded global footprint
  • Established presence in emerging countries
  • Strengthened aftermarket capabilities
  • Strong balance sheet provides ample capacity to continue execution of acquisition

strategy globally

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22 /// Investor Presentation, November 2017

/// COMPELLING INDUSTRY DYNAMICS, STRONG COMPANY FUNDAMENTALS

  • Compelling industry dynamics
  • Worldwide rail supply market large with share growth opportunities
  • Efficient transportation system essential to global economic growth
  • Strong company fundamentals
  • Market leader with substantial installed base
  • Diversified revenue model, strong balance sheet and cash flow
  • Wabtec Excellence Program drives continuous improvement
  • Focused growth strategies and capital to invest
  • Significant synergies and growth opportunities from Faiveley Transport acquisition
  • Board and Management own about 10% equity stake, with incentive compensation

tied to EPS, working capital and economic profit

  • 16% EPS CAGR since 2006
  • On track for long-term growth