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Wabtec anticipates market rebound in 2H

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An anticipated sequential rebound in rail volumes in the second half of 2020 should support Wabtec’s (NYSE: WAB) revenues in the third and fourth quarters, executives said during the company’s second-quarter earnings call on Tuesday, July 28.

For 2020, Wabtec provided sales guidance of $7.3 billion to $7.6 billion, earnings per diluted share guidance of between $2.05-$2.35 and adjusted earnings per diluted share of $3.50-$3.80. The adjusted guidance excludes estimated expenses for restructuring, transaction and amortization expenses related to Wabtec’s merger with GE Transportation last year.

Wabtec management based their assumptions for full-year guidance on how the company’s operations performed in the first half of this year. The guidance also assumes no material escalations in the severity or the duration of the COVID-19 pandemic, nor any sheltering-in-place mandates in response to the pandemic, Wabtec said. 

There are several factors that will influence how Wabtec’s freight segment performs in the second half of this year, according to Wabtec President and CEO Rafael Santana.

The company will be watching the pace of the “unparking” of locomotives and rail fleets, both in North America and abroad, according to Santana. He was referring to the Class I railroads’ decisions to park locomotives because of the COVID-19 pandemic-induced drop in rail volumes. The railroads will be “unparking” their locomotives once volumes rebound, he said.

Wabtec will also be tracking orders for locomotives and rail equipment in international areas where the company is seeing demand growth. Those areas include Australia, Brazil, China, Russia and the former Soviet countries representing the Commonwealth of Independent States. Wabtec is also continuing to deliver equipment to India and Egypt per its contracts in those countries. 

Production growth in agricultural and mining is among the reasons why Wabtec is seeing demand for rail equipment in certain geographical areas, Santana said. 

Even though the Class I railroads have been seeking to make their networks more efficient through precision scheduled railroading initiatives, Wabtec is able to provide services to the railroads because of the fuel-saving technologies they offer, executives said. The company is working on developing engines and equipment that would reduce fuel consumption by 10-30%, and it has been testing a heavy-haul, battery-operated locomotive. 

Second-quarter financial results

Like other rail equipment manufacturers, the COVID-19 pandemic impacted Wabtec’s second-quarter profits. 

Wabtect’s net income for the second quarter of 2020 was $86.8 million, or $0.46 per diluted share, compared with $104.1 million, or $0.54 per diluted share, in the second quarter of 2019. Both figures are for net income attributable to Wabtec shareholders.

Net sales for the second quarter were $1.74 billion, compared with $2.24 billion for the same period in 2019, while operating expenses were $327.3 million versus $414.1 million.

Income from operations was $159.4 million, compared with $200.6 million in the same period of 2019.

”We could not have imagined a greater stress test for our company, and how we would perform in a difficult environment, than the one we’re seeing today,” Santana said.

(Wabtec)

Declines in both freight and transit segment sales contributed to the year-over-year decrease in profits. Wabtec attributed the declines to sales disruptions resulting from the COVID-19 pandemic.

Freight net sales were $1.2 million in the second quarter, compared with $1.5 million a year ago, amid lower deliveries of locomotives and components for freight cars and offset by sales growth for digital electronics. Freight income from operations was $141.5 million, compared with $167.5 million last year. 

For Wabtec’s transit segment, sales were $532.7 million, compared with $710 million in the second quarter of 2019, on lower original equipment and aftermarket sales. Transit income from operations was $40.2 million, compared with $62.6 million.

“Wabtec delivered a strong operational quarter despite a difficult and dynamic environment as a result of the COVID-19 pandemic. Against a backdrop of uncertainty and unprecedented challenges, our teams drove strong cash flow from operations, allowing us to further strengthen our financial position. We also continue to make significant progress on our cost and synergy plans, giving us confidence that we will deliver on our synergy targets for 2020, as well as exceed our $250 million synergy run rate ahead of schedule,” Santana said in the earnings release.

Click here for more FreightWaves articles by Joanna Marsh.

Related articles:

Wabtec anticipates volume recovery later this year

Wabtec seeks global opportunities amid North American rail slump

Wabtec buys Iowa locomotive builder and repairer

Source: https://www.freightwaves.com/news/wabtec-anticipates-market-rebound-in-2h

Blockchain

Potential Benefits of Blockchain Technology in Accountancy

Potential-Benefits-of-Blockchain-Technology-in-Accountancy

Wondering how Blockchain can revolutionize accounting? You have landed on the right page. This article will talk about Blockchain technology, technologies that make Blockchain possible, and how it can impact the accounting domain.    So let’s get started with what this technology is all about.    Table of Contents    What is Blockchain? Technologies That … Read More

The post Potential Benefits of Blockchain Technology in Accountancy first appeared on Blockchain Consultants.

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Potential-Benefits-of-Blockchain-Technology-in-Accountancy

Wondering how Blockchain can revolutionize accounting? You have landed on the right page. This article will talk about Blockchain technology, technologies that make Blockchain possible, and how it can impact the accounting domain.    So let’s get started with what this technology is all about.    Table of Contents    What is Blockchain? Technologies That … Read More

Source: https://blockchainconsultants.io/potential-benefits-of-blockchain-technology-in-accountancy/?utm_source=rss&utm_medium=rss&utm_campaign=potential-benefits-of-blockchain-technology-in-accountancy

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Aerospace

Adept at adaptation

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Adept at adaptation

There may be challenges ahead for the industry, but UK-based AS9100 Rev D accredited precision engineering specialists, Bright Engineering says it is holding its nerve.

Being situated at the heart of East Lancashire’s aerospace belt might normally be seen as an overwhelming benefit for any small business involved in advanced manufacturing. However, as is the case for many subcontractors up and down the country, the grinding to a halt of the commercial aviation sector has proved to be a huge challenge, albeit not entirely insurmountable.

Bright Engineering services a number of industries with the supply of precision components and sub-assemblies and has customers across the UK, and several in the US. Bright counts aerospace as around 20-30% of its operating income, but is fortunate to be involved in many other sectors including green technologies, electronics and automation, as well as defence.

Pre-lockdown, the company had built up resilience on the back of strong multi-sector demand in 2018-2019, and in 2019 pressed ahead with a fairly extensive programme of machine tool investment upwards of £1 million. This expenditure signified Bright’s most major rejuvenation of the shopfloor and replacement of ageing machinery it had seen for several years, and followed a trade mission to Yamazaki Mazak’s headquarters and plant operations in Japan.

Bright’s latest CNC machines include the Mazak Variaxis i500 and the Integrex J200S

For Bright, the benefit of the trip not only extended to witnessing first-hand how the machine tool manufacturer handles quality, but allowed the business to forge new relationships which have endured. From this experience Bright now counts new customers and suppliers which have allowed it to strengthen the business throughout the pandemic.

One of these relationships led to a production order for ventilator components, which carried the business and its people through the dark days of the March 2020 lockdown.

“The medical order at the time of the Covid outbreak was a matter of pride for Bright and its workforce,” says managing director, Jon Hoyle. “It involved working day and night seven days a week until it was complete and our team enjoyed being part of this national effort. It kept us going mentally, as well as at an operational level.”

As the end of the lockdown emerged, Bright’s usual customers started coming back to life, although Hoyle admits in certain sectors it is still only coming back in fits and starts. Sales from the US have remained strong, whereas many buyers in the UK have remained on furlough. The result from this is all to do with adaptability. Pre-lockdown, Bright’s strategic aims were around building a long-term orderbook for the future.

Ready and willing

The company admits the vision is currently a bit shorter-term, but as sales director, Steve Amey says: “It ensures we remain flexible, listen to the needs of our customers and evolve the business plan on a monthly basis. That is the reality of 2020, and we believe that regular refinement of our working model will make us all the stronger in readiness for 2021. The capacity to spring back is ready and waiting.”

Of course, the business has utilised the much-welcomed furlough scheme as the pandemic has evolved. However, it has also taken many positive steps to guarantee operational stability in testing times. In certain cases, remote working has really proved positive for Bright and the workforce have made good use of products, such as Microsoft Teams, Skype, WhatsApp, etc. to really stay in touch, keep things moving for the clients, and transmit key messages to staff around the pandemic.

As well as staff communication, Bright has also engaged some really creative uses of Teams, as Amey continues: “Involvement in the Ventilator Challenge UK project was a fast-paced affair, with design and production requirements evolving several times a day. At one point, Teams was the catalyst for one of the quickest pieces of customer decision-making I have seen in my career.”

The episode Amey refers to was a dramatic win in terms of customer experience, and saw Bright on Teams chat with its own supplier partner, the customer, as well as the end user. The usual protecting of sources had to be put to one side for the good of the project, and in fact led to one of the proudest moments of collaboration Bright has been involved with. With Bright’s strategic input, using the customer’s CAD/CAM package over Teams, a component was redesigned, re-posted to CAM and sample component produced by Bright within 90 minutes of the initial technical query being raised.

Indeed, there have been some other real wins for the business during the course of the year too. As certain staff may have been off work for shielding purposes, the company’s apprentice cohort were relied upon more heavily.

“The conditions thrust on us by this pandemic have actually allowed our apprentices to shine,” states Hoyle. “20% of our workforce are undergoing training from Level 3 to HNC, and during the ventilator production our youngsters seized the challenge, often taking the responsibility that we would expect of a quality inspector or section leader. We got to see their very best attributes over a four-week period and it was impressive.”

Bright has rejuvenated its shopfloor and replaced ageing machinery

Further to keeping production moving, the apprentice team have at times, had slightly more interaction with their leaders, and less day-to-day pressures than any other normal year in the company’s history. Ensuring this time wasn’t wasted, it has allowed for accelerated periods of learning on Bright’s latest complex CNC machines, such as the Variaxis i500 and the Integrex J200S multi-tasking machines. In fact, it hasn’t gone unnoticed across any of Bright’s senior leaders that its apprentices have really seized the opportunity to develop their skills over the last six months.

On the horizon

As Bright looks to the near future, there is an equal mixture of concern and trepidation but also a feeling of opportunity. Hoyle believes there is a strong case for the government to continue some targeted support for the sector. Areas like East Lancashire, Motorsport Valley in the South East, West Midlands, Northern Ireland and the North East all provide a rich and varied contribution to the UK advanced manufacturing output as a whole. Plenty of people in the industry felt a continuation of the job retention scheme was necessary, particularly in a way that specifically encouraged part-time working. The Chancellor has since made his announcement, but Bright would also like to see business rate support as well as increased assistance for apprentices over the age of 18, particularly those on HNC programmes.

“Aerospace provides a large portion of business to UK subcontractors and government and companies themselves need to get to the other side of the pandemic in one piece,” concludes Hoyle. “For the foreseeable future, we control costs, look at alternative revenue streams and get even closer to our existing customers.

“Customers in the main aren’t looking to exploit the current situation. Instead they want reliable trustworthy supply chain partners and our continued support. We also talk to our competitors and listen to their problems and successes; sharing best practice is usually free of charge, but highly valuable, and that one successful collaboration could make all the difference to our joint future success.”

www.brightengineering.co.uk

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Source: https://www.aero-mag.com/bright-adept-at-adaptation-13102020/

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Aerospace

ElevAero acquisition strengthens Midlands based supply chain

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ElevAero acquisition strengthens Midlands based supply chain

Adam Bartram director of ElevAero (left) with FPL’s former owner Geoff Neale

ElevAero, a leading manufacturer and supplier of specialist fabrications, assemblies and machined components for the aerospace and defence sectors, has acquired 100% shares of Formrite Precision Limited (FPL). The acquisition took effect from the 1st of October 2020 for an undisclosed sum as ElevAero continues to expand from its base in Nuneaton (UK).

FPL has established facilities in Aldridge, West Midlands, supplying a range of tooling and precision components to the aerospace and industrial gas turbine industries. Core services provided by FPL include large fabrications, machined components, test rigs and ground support equipment and assemblies. The company has leading OEMs and large tiered engine suppliers in its customer base.

FPL manufactures large fabrications, machined components, test rigs and ground support equipment

ElevAero says the acquisition is a strategic purchase which will complement and enhance its cost-effective offering for aerospace component manufacture, assembly and low-cost sourcing and supply.

Adam Bartram, director and owner of ElevAero said: “We have been looking to acquire Formrite Precision for some time to strengthen our position in the marketplace and to offer our clients a total end to end supply option. In a challenging time for the aerospace industry we are very proud to be in a position to continue investing in the right opportunities that will provide our customers with reliable, competitive supply solutions whilst protecting and creating jobs in the Midlands.”

www.elevaero.com

https://formrite.co.uk

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Source: https://www.aero-mag.com/elevaero-acquisition-strengthens-midlands-based-supply-chain/

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