Segment Information

3 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION

Wabtec has two reportable segments—the Freight Segment and the Transit Segment. The key factors used to identify these reportable segments are the organization and alignment of the Company’s internal operations, the nature of the products and services, and customer type. Initiatives to integrate GE Transportation operations into Wabtec including recent restructuring programs announced in late 2019 resulted in changes to the Company's organizational structure and the financial reporting utilized by the Company's chief operating decision maker to assess performance and allocate resources; as a result, certain asset groups were reorganized from the Freight Segment to the Transit Segment and vice versa. The change in the Company’s reportable segments was effective in the fourth quarter of 2019 and is reflected below in 2020 and through the retrospective revision of 2019 segment information. The Company believes these changes better present Management's new view of the business. The Company’s business segments are:

Freight Segment primarily builds new locomotives, manufactures and services components for new and existing freight cars and locomotives, rebuilds freight locomotives, supplies railway electronics, positive train control equipment, signal design and engineering services, and provides related heat exchange and cooling systems. Customers include large, publicly traded railroads, leasing companies, manufacturers of original equipment such as locomotives and freight cars, and utilities.

Transit Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically regional trains, high speed trains, subway cars, light-rail vehicles and buses, builds new commuter locomotives, refurbishes subway cars, provides heating, ventilation, and air conditioning equipment, and doors for buses and subways. Customers include public transit authorities and municipalities, leasing companies, and manufacturers of subway cars and buses around the world.

The Company evaluates its business segments’ operating results based on income from operations. Intersegment sales are accounted for at prices that are generally established by reference to similar transactions with unaffiliated customers. Corporate activities include general corporate expenses, elimination of intersegment transactions, interest income and expense and other unallocated charges. Since certain administrative and other operating expenses have not been allocated to business segments, the results in the following tables are not necessarily a measure computed in accordance with generally accepted accounting principles and may not be comparable to other companies.

Segment financial information for the three months ended March 31, 2020 is as follows:


In millions	Freight Segment		Transit Segment		Corporate Activities and Elimination		Total
Sales to external customers	$	1,301.0	$	628.9	$	—	$	1,929.9
Intersegment sales/(elimination)	12.5		9.1		(21.6)		—
Total sales	$	1,313.5	$	638.0	$	(21.6)	$	1,929.9
Income (loss) from operations	$	161.7	$	68.6	$	(13.0)	$	217.3
Interest expense and other, net	—		—		(68.1)		(68.1)
Income (loss) from operations before income taxes	$	161.7	$	68.6	$	(81.1)	$	149.2

Segment financial information for the three months ended March 31, 2019 is as follows:


In millions	Freight Segment		Transit Segment		Corporate Activities and Elimination		Total
Sales to external customers	$	915.5	$	678.1	$	—	$	1,593.6
Intersegment sales/(elimination)	15.7		4.1		(19.8)		—
Total sales	$	931.2	$	682.2	$	(19.8)	$	1,593.6
Income (loss) from operations	$	80.9	$	59.9	$	(73.5)	$	67.3
Interest expense and other, net	—		—		(52.8)		(52.8)
Income (loss) from operations before income taxes	$	80.9	$	59.9	$	(126.3)	$	14.5

Sales by product line are as follows:


	Three Months Ended March 31,
In millions	2020		2019
Freight Segment:
Equipment	$	408.0	$	267.1
Components	220.4		295.2
Digital Electronics	173.6		121.8
Services	499.0		231.4
Total Freight Segment sales	$	1,301.0	$	915.5

Transit Segment:
Original Equipment Manufacturer	287.0		327.3
Aftermarket	341.9		350.8
Total Transit Segment sales	$	628.9	$	678.1