WAB
#Good morning, <UNK>.
It's hard to predict right now, for us.
The visibility is not very good, and that's one of the reasons why we've really struggled the last two quarters in trying to get a forecast out there.
Projects keep getting pushed out, whether they are transit PTC-related projects, or just the spend by the Class I's.
We know what needs done to complete the implementation.
We also know what other enhancements we are going to be able to provide.
We do have good visibility on the technical support and MSAs, as <UNK> said.
The service agreements, we have couple of them signed and we're working on some others.
That will give us a lot more certainty on what the forecast and our revenue is.
But right now, it has been difficult.
I think that it should clear up later in the year, early next year, and we should have a pretty good estimate going forward.
But right now, it's hard to predict quarter to quarter, because of project delays and spending is just not being done in this particular area.
Again, it's a mixed bag, <UNK>.
In some countries there's good opportunities, like India.
As you know we won a large order for locomotives, freight locomotives, in India.
We are in the process of localizing the network.
We're investing in facilities there and we're building our resources and project team there.
So that's a very positive market for us.
We are seeing some improvement in Australia.
We still are delivering locomotive and freight industry equipment in South Africa.
Brazil is slow, but we do have an order for new bogie brake mounted equipment in Brazil.
And in Russia, they have announced that they want to retire all freight vehicles that are 30 years old, or more.
Which is a positive sign for us.
I wouldn't call it robust, the international opportunities, but there are some positive international opportunities that we are engaged in.
Hi, <UNK>.
We have a record backlog in transit, <UNK>.
On the transit side, we've won every major order in North America this year.
We continue to pick up small orders around the world.
We have very strong business in Fandstan, that's part collection, mainly.
We're getting ready to bid on the next two large orders in the North America market, the largest of which will be the next order in New York City.
On the transit side, it's very positive.
We just won a large overhaul order, another one in the UK.
We have very good market share in the UK, transit side and the overhaul business.
So both on the OEM and overhaul side, transit is very positive trend for us.
I think as far as the penalties, they haven't been explicitly defined by the government.
There was a deadline in 2015, and the penalties from that were an extension of 2018.
I can't predict what the government position will be when that time comes.
But what I can tell you is that our customers are working hard to implement.
I've recently visited UP and am heavily engaged with all of our Class I railroads, and they're working hard on the implementation.
As <UNK> said, that have cut back significantly their CapEx.
They are trying to balance their pros and cons in terms of expenditures and value, just like we are, in a tough market.
Again, it's a mixed bag, <UNK>.
The oil and gas hasn't improved, as you know, but we do have some other business.
We have business associated with power generation and power distribution.
We are building a plant in China, we spoke about that before, to deliver new equipment.
In the power generation area; that's thermal equipment.
We have a nice array of business in areas like ports for drilling systems, festoon systems.
With Fandstan, we have some commodity business that generates from things like our rubber business.
Again, I would say it's not robust but ---+ and there are certainly pressures on the oil and gas side that haven't recovered, but we do have some positive movement in the industrial side.
Good morning, <UNK>.
I'll take the first one and <UNK> can take the second one.
As we said in the text, as we've gone through this process over the 18 months, we've been nothing but happy with what we are seeing.
We are very pleased with their progress, and we are excited about the opportunities and hopefully we can provide a lot more color about that when we have our call after the close.
(multiple speakers)
We've modeled this a couple different ways.
The Faiveley family, if you read the press release, has some options and can elect a range of cash versus stock.
So if we just assume the most conservative view, that they take the most cash that they can.
We'll have a leverage ratio that will be approaching three times and which is a little bit higher than what we had originally said, but well within the comfort range that I think makes sense, especially considering the aggressive and the important deleveraging program that we will have is we get the companies combined and drive the results of the two companies and generate cash.
<UNK>, I would tell you that the length of the agreements vary three to five years.
That's about the time frame that we're negotiating.
The agreements are coming in from the Class I's, as well as, I think we mentioned, MRS in the past.
We are in the process of negotiating with all the Class I railroads.
We've closed a couple.
I don't want to mention them by name, but we believe that by the end of this year, we will have closed the ones for North America ---+ for the US.
I'm not so sure about that Canadians but for the Class I's in the US.
We have some revenue already that we are booking, and it will accelerate in 2017, yes.
The PTC sales were about $55 million, and the total train control including the signaling, was about $80 million.
You had about $25 million, in Q3.
As far as the margin, there's some of the businesses, similar to PTC.
When you get into some of the construction business, it's less than the PTC average.
It's a combination of a lot of incremental things.
We are continuing to address that cost side for sure, both in discretionary-cost areas, as well as headcount.
We have a forecasting process in place, that we are reviewing our forecast on a weekly basis.
We have some improvement on the revenue side that we are anticipating that is obviously going to bring additional EBIT.
There is no one big step change third quarter to fourth quarter.
There's a lot of weak ---+ small and weak suppliers that are falling out, that's for sure.
I don't think we are going to see any major consolidation in the market, <UNK>.
I think we need to do both organic development and acquisitions.
If you're talking about a $12 billion market, plus, and the opportunities are pretty broad if you look across the total signaling market worldwide, and are broad in terms of your definition, then you're talking about a $22 billion market across the European train management system, traditional mass transit signaling system, things like that.
We are trying to look at niche opportunities.
We are trying to leverage our capabilities that exist now.
For instance, some of that non-PTC related revenue <UNK> talked about, is in a controlled systems area where we could expand our central control and office products.
We could extend our diagnostics.
We have a data analytics system called Wabtec One, that we're putting in place.
We're looking at improving the vitality of our systems, so going from non-vital to vital systems.
So there's a lot of areas that we can continue extensions of our existing technology.
And then acquire businesses, but where ---+ you have two choices in the signaling area, either you go big bang and acquire a billion-dollar signaling organization that is full-fledged signaling across all market areas, or you do it in small incremental steps.
We, kind of, are pushing the latter.
Good morning, <UNK>.
I think in terms of run rate, I think about $75 million would be the right number there.
There is definitely some items that are in there that are discrete, that were to our favor.
About $70 million to $75 million is probably the right number going forward.
And next year, we're going to have to re-base.
Yes, we're going to have to re-base line with the Faiveley acquisition, but our portion of that would be the run rate.
If you look at what we've been able to do today and the drastic changes, next year there is, as we see it there should be some benefits of that restructuring and cost-cutting actions.
I think that we've been able to improve, and I think <UNK> mentioned it in his talk, we have actually improved our transit margins nicely throughout the year.
I think by doing that we've offset the mix effect of a lower margin business.
So I think that we should be able to continue that trend into the future.
And you're right, there are some negatives that will continue into next year.
The car build, and possibly the locomotive build.
The actual traffic will have a big dependent on what happens with the economy.
But I think some of the projects, our strategic plan execution, those ---+ there's a lot more positives than negatives.
I think in terms of storage, it's up around 25%, <UNK>.
As far as in or out, there's some pick up mainly the area of grain, it will be a record year for grain.
There is some pick up there.
I don't think there's ---+ is certainly not a dramatic change at this point.
We are not seeing any dramatic change.
I think it's trending in a positive direction, and hopefully we hit the low point in terms of traffic.
But it's not dramatic change.
I think if the traffic flattens out, it could be there or little less.
And if the traffic continues to drop, then I think you know what direction it will go.
We're hopeful that one of two things will happen if they don't build new.
That some of the overhaul projects that were identified and delayed will come back.
That's a very positive opportunity.
And frankly, more of a short-term opportunity than the OEM.
Thank you.
Thanks, Mike.
Thanks everybody for joining us.
We hope to talk to you next month after we complete the purchase of the family stake.
Have a good day.
Good bye.
