12.01.16-Wabtec Acquires Majority Ownership of Faiveley ......E-mail: [email protected] 1001 Air...

News Release

Tim Wesley Phone: 412.825.1543 Wabtec Corporation E-mail: [email protected] 1001 Air Brake Avenue Website: www.wabtec.com Wilmerding, PA 15148

Wabtec Acquires Majority Ownership Of Faiveley Transport; Updates 2016 Guidance, Provides 2017 Preliminary Information

WILMERDING, PA, December 1, 2016 – Wabtec Corporation (NYSE: WAB) has acquired majority

ownership of Faiveley Transport S.A. (Euronext Paris: LEY), after completing the purchase of the

Faiveley family’s stake, which represented about 51% of the company’s shares outstanding. Wabtec

plans to launch a tender offer for the remaining public shares in December.

Faiveley Transport is a leading global provider of value-added, integrated systems and services for

the railway industry with annual sales of about $1.2 billion.

Albert J. Neupaver, executive chairman of Wabtec, said: “The acquisition of Faiveley Transport is an

excellent strategic fit, expanding our geographic presence, broadening our product and service

capabilities, and strengthening our technology and innovation initiatives. The combination of two rail

industry leaders creates compelling growth opportunities and synergies, and strengthens the diversity of

our revenue base. We’re pleased to welcome the Faiveley family as long-term Wabtec shareholders with

representation on our Board of Directors.”

Wabtec acquired the family stake for about $212 million in cash and 6.3 million shares of Wabtec

common stock. Through the tender offer, the public shareholders of Faiveley Transport will have the

option to elect to receive €100 per share of Faiveley Transport in cash or 1.1538 Wabtec common shares

per share of Faiveley Transport. The total purchase price for 100% of the shares of Faiveley Transport is

about $1.7 billion, including assumed debt and net of cash acquired. The $1.2 billion cash portion of the

transaction will be funded from about $325 million of cash on hand, the net proceeds from a recent

$750 million senior notes offering and the company’s existing revolving credit facility and term note.

The strategic combination of Wabtec and Faiveley Transport creates one of the world’s leading rail

equipment companies, with revenues of about $4.2 billion and a presence in all key transit and freight rail

regions worldwide. Wabtec now expects to realize at least $50 million in annual pre-tax synergies from

the combination by year three, and the transaction will be accretive to Wabtec’s earnings per diluted

share in 2017.

News Release


Raymond T. Betler, Wabtec’s president and chief executive officer, said: “Our combination with

Faiveley Transport brings Wabtec many complementary products, a strong presence in the European and

Asia Pacific transit industries, and solid relationships with blue-chip, global customers. Together, we will

be a more efficient global competitor, with a focus on technology, quality and customer service, and a

singular mission: to help customers improve their safety, productivity, and efficiency.”

Stéphane Rambaud-Measson, chairman of the Management Board and chief executive officer of

Faiveley Transport, has joined Wabtec as president and CEO of its Transit Group and as a corporate

executive vice president, reporting to Betler. Also, Philippe Alfroid and Erwan Faiveley were elected as

new members of the Wabtec Board of Directors.

Rambaud-Measson said: “Wabtec’s Transit Group, under the Faiveley Transport brand name, will

pursue its objective to be a global leader in railway equipment and services. The passenger transit

business typically provides a steady flow of new projects and aftermarket growth opportunities, and we

are well positioned in key global markets such as Europe and Asia Pacific.”

2016 Guidance Update

Including the effects of the acquisition, Wabtec updated its 2016 guidance as follows:

Full-year revenues are expected to be down about 10% to about $2.95 billion.

Full-year, GAAP earnings per diluted share are expected to be between $3.45-$3.50. During

2016, the company expects to record restructuring and transaction-related costs of about

$60 million pre-tax and a one-time effective tax rate adjustment for non-deductible transaction

costs that will result in additional tax expense of about $10 million. These items equal about

50 cents per diluted share after-tax.

Excluding the restructuring and transaction-related costs, and the tax-rate adjustment,

Wabtec expects full-year adjusted earnings per diluted share to be between $3.95-$4.00.

2017 Preliminary Information

Including the effects of the acquisition, Wabtec provided the following preliminary information for the

full year of 2017:

Revenues are expected to be about $4.2 billion.

Excluding restructuring and transaction-related costs, adjusted operating margin is expected

to be about 15-16%.

Excluding restructuring and transaction-related costs, adjusted earnings are expected to be

about 8% higher than the company’s adjusted earnings in 2016.

Wabtec will update this preliminary information when the company reports its 2016 results.

News Release


Wabtec Corporation is a global provider of value-added, technology-based products and services for

freight rail, passenger transit and other industrial segments. The company manufactures a range of

products for locomotives, freight cars and passenger transit vehicles, new switcher and commuter

locomotives and provides aftermarket services.

Faiveley Transport is a global supplier of high added value integrated systems for the railway

industry. The company supplies manufacturers, operators and railway maintenance bodies worldwide

with the most comprehensive range of systems in the market: Energy & Comfort (air conditioning, power

collectors and passenger information systems), Access & Mobility (passenger access systems and

platform doors), Brakes & Safety (braking systems and couplers) and Services.

Wabtec will host a call with analysts and investors at 10 a.m., U.S. eastern time, today. To

listen, go to www.wabtec.com and click on the “Webcasts” tab in the “Investors” section. Included with this press release is a presentation that will be discussed during the call.

Forward-Looking Statements

Statements contained in this press release which are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements and certain information contained in the release involve risks and uncertainties that could result in actual results differing materially from expected results, including Wabtec’s estimated future results of operations and benefits expected to be derived from the acquisition of Faiveley Transport. Forward-looking statements represent Wabtec’s expectations and beliefs concerning future events, based on information available to Wabtec as of the date of this release. Wabtec undertakes no obligation to publicly update and revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release. Additional information regarding these and other factors is contained in Wabtec’s SEC filings, including without limitation Wabtec’s Form 10-K and Form 10-Q filings. Certain Legal Matters

This communication is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this press release or otherwise. The distribution of this communication in jurisdictions outside the U.S. or France may be restricted by law or regulation and therefore any person who comes into possession of this communication should inform themselves about, and comply with, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws or regulations of any such relevant jurisdiction.

Faiveley Transport is incorporated in France and listed on Euronext Paris and any offer for its securities will be subject to French disclosure and procedural requirements, which differ from those that are applicable to offers conducted solely in the U.S., including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments. The transactions described above will be structured to comply with French and U.S. securities laws and regulations applicable to transactions of this type. Securities Act of 1933, as amended.

novembre 10, 2016

/// December 2016

/// ACQUISITION OF FAIVELEY TRANSPORTI n v e s t o r P r e s e n t a t i o n

2 /// Investor Presentation, December 2016

Statements contained in this presentation, which are not historical facts, are forward-lookingstatements as that item is defined in the Private Securities Litigation Reform Act of 1995. Thispresentation contains forward-looking statements and certain information contained in thispresentation involves risks and uncertainties that could result in actual results differing materially fromexpected results. Forward-looking statements represent the Company’s expectations and beliefsconcerning future events, based on information available to the Company as of the date of thispresentation. The Company undertakes no obligation to publicly update or revise any forward-lookingstatements 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


/// STRATEGIC COMBINATION

• Wabtec + Faiveley Transport = A leading global provider of equipment, systems and value-added services for transit and freight rail

• Increased diversity of revenue base across markets, products and geography to offset cyclicality of U.S. freight market

• Strong platform of product and service capabilities in key global transit markets (Europe and Asia Pacific), which offer stability and growth opportunities

• Enhanced innovation and technology initiatives

• Experienced management team

• Synergies to drive growth strategies, performance improvements

• World-class lean manufacturing, process excellence and continuous improvement

• Operations in 30+ countries; sales in more than 100

• Large and global installed base

C r e a t e s D i v e r s e , G l o b a l R a i l I n d u s t r y L e a d e r


/// TRANSACTION OVERVIEW

€100 per share

Enterprise Value of about $1.7B, including assumed debt, net of cash acquired

PURCHASE PRICE

Wabtec purchased about 51% of outstanding shares of Faiveley Transport, which were owned

by the Faiveley family

Family received about $212M in cash and 6.3M Wabtec common shares

Wabtec will begin a tender offer for the remaining Faiveley Transport shares owned publicly,

for €100 per share all-cash or 1.1538 Wabtec common shares for each share of Faiveley Transport

CONSIDERATION

Wabtec has financed the transaction through existing cash and credit facilities, including $750M of senior notes with

an interest rate of 3.45%

FINANCING

Closing of the tender offer expected in early 2017

WAB intends to delist Faiveley Transport from Euronext after the tender offer if minority interests

represent less than 5%

CLOSING


• Revenues expected to be about $2.95B, down about 10% from 2015- Including about $100M of revenue from Faiveley Transport

• GAAP EPS expected to be between $3.45-$3.50- Including about $60M of pre-tax restructuring and transaction-related costs

About $40M of transaction costs About $15M of Faiveley Transport debt restructuring costs About $3M of additional interest costs

- Including about $10M of additional tax expense due to a one-time effective tax rate adjustment for non-deductible transaction costs

- These items equal about 50 cents per diluted share after-tax

• Excluding the restructuring and transaction-related costs, and the tax rate adjustment, adjusted EPS expected to be between $3.95-$4.00, down about 2.5% from 2015

/// 2016 GUIDANCE


• Revenues are expected to be about $4.2B; we expect to continue to face headwinds in our U.S. freight market

• Excluding restructuring and transaction-related costs, adjusted operating margin is expected to be about 15-16%

• Excluding restructuring and transaction-related costs, adjusted earnings are expected to be about 8% higher than the company’s adjusted earnings in 2016

• This takes into account the required regulatory divestitures and includes estimated net synergies in 2017 of about $7-10M

• We are estimating the share count to be about 96M, but this can vary as we complete the tender offer

• Again, all of this is preliminary information; we will provide an update when we report our 2016 results in February

/// 2017 PRELIMINARY INFORMATION


• Expected long-term annual synergies of at least $50M to be achieved by year three through:

- Revenue growth- Supply chain efficiencies- Review of operations for efficiency and cost savings- Leveraging SG&A capabilities

• At this point, we estimate synergies of about $15-20M in the first year with estimated one-time costs of $8-10M; these are just estimates; with the anti-trust restrictions behind us, we have the opportunity to verify and solidify the plans we’ve been discussing for quite some time; to achieve the goal of at least $50M in annual synergies by year three will require additional restructuring and one-time costs

• Other benefits from the acquisition:• Complementary geographic presence, products and engineering activities • Global scale in freight and transit rail equipment helps drive operational excellence• Improves ability to offer safety, productivity and efficiency enhancements

to global rail markets

/// LONG-TERM SYNERGIES TO DRIVE GROWTH


• Al Neupaver remains WAB Executive Chairman through initial phase of the integration

• Ray Betler remains WAB President and CEO

• Stéphane Rambaud-Measson is now President and CEO of Wabtec's Transit Group (now known as Faiveley Transport) and a Wabtec Corporate Executive Vice President, 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

• At this point, I’d like to hand this off to Ray for some further remarks…

/// EXPERIENCED MANAGEMENT TEAM


/// DIVERSIFIED REVENUE BASE

SEGMENT

GEOGRAPHY

MARKET

Freight

45%Transit 55%

NAFTA50%

Rest of the

world50%

OEM40%

After-market 60%


/// COMPELLING INDUSTRY DYNAMICS

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

• Global 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 2.3% CAGR, mainly in Asia Pacific (driven by growth of 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


• 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 will continue into 2017

/// FREIGHT SEGMENT

Source : Wabtec estimates.

NAFTA20%

Asia -Pacific30%

Russia -CIS25%

Europe15%

Other10%

Locomotives (Global installed base of ~ 130,000)

NAFTA 30%

Asia -Pacific 25%

Russia -CIS 25%

Europe 15%

Other 5%

Freight Cars (Global installed base of ~ 5 million)


/// FREIGHT SEGMENT: Locomotive


/// FREIGHT SEGMENT: Freight Car


/// COMMENTS FROM STÉPHANE RAMBAUD-MEASSON

On behalf of everyone at Faiveley Transport, I’d like to say we are excited tobe part of Wabtec, which is known around the world as a rail industry leader;it took us longer than we expected but that extra time gave us more time toplan our integration strategies and process

Faiveley Transport recently reported strong revenues and backlog, and we arepositioned for future growth, as we continue to execute our strategic plan

We believe Wabtec and Faiveley Transport have not only a shared history, butsimilar company cultures and values. For example, we have a joint passion tosatisfy our customers through excellence in quality, superior service andproject execution. I expect the management teams will work well together

We are excited to work with the Wabtec team to build on our recent successand look forward to the future with optimism

The strong commitment of the Faiveley family as a long-term shareholder is atestimony of the powerful rationale of the combination

Stéphane Rambaud-MeassonPresident & CEO Transit Segment


• 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)

• Infrastructure-focused spending in U.S. provides opportunities

/// TRANSIT SEGMENT

NAFTA5%

Asia – Pacific60%

Russia - CIS 10%

Europe20%

Other 5%

Source : Wabtec estimates.

Transit Cars (Global installed base of ~ 470,000)


/// TRANSIT SEGMENT: Transit Cars


/// TRANSIT SEGMENT: Buses


(Actual Performance, 2006-15:Sales growth CAGR of 13% • EPS growth CAGR of 19%)

/// WABTEC’S VISION FOR THE FUTURE

TO AVERAGE DOUBLE-DIGIT

EPS GROWTH THROUGH THE BUSINESS CYCLE


Wabtec Excellence Program drives our investment in these Growth Strategies:

/// PERFORMANCE-DRIVEN GROWTH STRATEGIES

PRODUCT INNOVATION

& NEW TECHNOLOGIES

GLOBAL AND MARKET EXPANSION

AFTERMARKET PRODUCTS

AND SERVICESACQUISITIONS


/// 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 Councilsfoster culture of continuousimprovement in all keyprocesses and disciplines, including leanmanufacturing, supply chain, quality and innovation

• Drives cash flow, reducescosts and improvesefficiency to help manage through cycles

Res

ult

Ope

ratio

nal M

anag

emen

t Sys

tem

Stra

tegi

c bl

ocks

WEP – House of Business Excellence


/// PRODUCT INNOVATION AND NEW TECHNOLOGIES

• Combined 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, which offers 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

• Continuous improvement with implementation of WEP throughout engineering organization

• 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


/// GLOBAL AND MARKET EXPANSION

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

and South Africa

• Selective opportunities in adjacent markets where we offer competitive advantages- About 10% of sales (power generation and other industrial)

• New, state-of-the-art production facility in Czech Republic

• 17% CAGR in non-NAFTA sales since 2005


/// 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

• 15% CAGR in aftermarket sales since 2005


/// 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 on 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


/// STRATEGIC COMBINATION

• Wabtec + Faiveley Transport = A leading global provider of equipment, systems and value-added services for transit and freight rail

• Increased diversity of revenue base across markets, products and geography to offset cyclicality of U.S. freight market

• Strong platform of product and service capabilities in key, global transit markets (Europe and Asia Pacific), which offer stability and growth opportunities

• Enhanced innovation and technology initiatives

• Experienced management team

• Synergies to drive growth strategies, performance improvements

• World-class lean manufacturing, process excellence and continuous improvement

• Operations in 30+ countries; sales in more than 100

• Large and global installed base

C r e a t e s D i v e r s e , G l o b a l R a i l I n d u s t r y L e a d e r


This communication is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securitieswhether pursuant to this press release or otherwise.

The distribution of this communication in jurisdictions outside the U.S. or France may be restricted by law or regulationand therefore any person who comes into possession of this communication should inform themselves about, and comply with, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securitieslaws or regulations of any such relevant jurisdiction.

Faiveley Transport is incorporated in France and listed on Euronext Paris and any offer for its securities will be subjectto French disclosure and procedural requirements, which differ from those that are applicable to offers conductedsolely in the U.S., including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments. The transactions described above will be structured to comply with French and U.S. securities laws and regulations applicable to transactions of this type.

No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. contained in this presentation which are not historical facts are forward-lookingstatements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements and certain information contained in the presentation involve risks and uncertainties that could result in actual resultsdiffering materially from expected results, including the Company’s proposed acquisition of Faiveley Transport, which issubject to regulatory and other conditions, the timing of the transaction and benefits expected to be derivedtherefrom. 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 release. The Company undertakes no obligation to publicly update and revise any forward-looking statements to reflect events or circumstances that may arise afterthe date of this release. 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.

/// CERTAIN LEGAL MATTERS

12.01.16-Wabtec Acquires Majority Ownership of Faiveley ......E-mail: [email protected] 1001 Air...

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