On May 8, I wrote my first analysis of Westinghouse Air Brake Technologies (NYSE: WAB ), the company more commonly known as Wabtec. The company had recently announced positive Q1 2025 results that included anI have been involved in the financial world for over 20 years with experience as an advisor, teacher, and writer. I am a full believer in the free-market system and that financial markets are efficient with most stocks reflecting their real current value. The best opportunities for profits on individual ...

Core Insights - Westinghouse Air Brake Technologies Corporation (WAB) reported Q2 2025 earnings per share (EPS) of $2.27, exceeding the Zacks Consensus Estimate of $2.18, marking a 15.8% year-over-year increase driven by higher sales, operating margin expansion, and share repurchases [1][9] - Revenues for the quarter were $2.71 billion, falling short of the Zacks Consensus Estimate of $2.77 billion, but reflecting a 2.3% year-over-year growth due to increased sales in the Transit segment, offset by lower Equipment sales [2][9] Financial Performance - WAB raised its 2025 adjusted EPS guidance to a range of $8.55 to $9.15 from the previous range of $8.35 to $8.95, supported by strong first-half performance, mergers and acquisitions, and prudent cost management [3] - The company also increased its 2025 revenue guidance to $10.925 billion to $11.225 billion from $10.725 billion to $11.025 billion, primarily due to the acquisition of Evident Inspection Technologies Division [4] Segment Performance - The Freight segment reported net sales of $1.91 billion, a slight decline of 0.1% year-over-year, impacted by lower locomotive deliveries due to a supplied part issue, although service sales increased by 6% [5][6] - The Transit segment saw net sales grow by 8.7% year-over-year to $787 million, with an adjusted operating margin increase to 15.2% from 12.7% in the same quarter of 2024 [6] Operational Details - Total operating expenses rose by $22 million year-over-year to $466 million, with the operating ratio increasing to 17.2% from 16.8% [7] - WAB ended the quarter with cash and cash equivalents of $1.49 billion, a significant increase from $698 million at the end of the previous quarter, while long-term debt rose to $4.78 billion from $3.50 billion [7] Shareholder Returns - During the quarter, WAB paid $44 million in dividends and repurchased shares worth $50 million [8]

Core Insights - Westinghouse Air Brake Technologies (WAB) reported revenue of $2.71 billion for the quarter ended June 2025, reflecting a year-over-year increase of 2.3% [1] - The earnings per share (EPS) for the quarter was $2.27, up from $1.96 in the same quarter last year, indicating a positive trend in profitability [1] - The reported revenue was below the Zacks Consensus Estimate of $2.77 billion by 2.38%, while the EPS exceeded the consensus estimate of $2.18 by 4.13% [1] Financial Performance Metrics - WAB's backlog totaled $21.83 billion, slightly below the two-analyst average estimate of $22.34 billion [4] - The backlog for the Transit Group was $4.69 billion, surpassing the average estimate of $4.42 billion [4] - The backlog for the Freight Group was $17.14 billion, which was lower than the average estimate of $17.92 billion [4] Segment Performance - Sales to external customers in the Transit Segment reached $787 million, exceeding the four-analyst average estimate of $762.91 million, representing a year-over-year increase of 8.7% [4] - Sales to external customers in the Freight Segment were $1.92 billion, falling short of the estimated $2.01 billion, reflecting a slight decline of 0.1% compared to the previous year [4] - Adjusted income from operations in the Freight Segment was $480 million, compared to the average estimate of $487.43 million, while the Transit Segment reported an adjusted income of $120 million, exceeding the estimate of $104.42 million [4] Stock Performance - WAB's shares have returned +5.2% over the past month, slightly underperforming the Zacks S&P 500 composite's +5.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

PART I—FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements for the quarter and six months ended June 30, 2025, detailing assets, liabilities, income, and cash flows [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This item presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$20.39 billion**, driven by a rise in cash, receivables, and goodwill, while total liabilities grew to **$9.55 billion** primarily due to increased long-term debt Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$20,391** | **$18,702** | | Total current assets | $6,354 | $4,943 | | Goodwill | $8,936 | $8,710 | | **Total Liabilities** | **$9,546** | **$8,569** | | Total current liabilities | $3,606 | $3,792 | | Long-term debt | $4,784 | $3,480 | | **Total Equity** | **$10,845** | **$10,133** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, net sales increased to **$2.71 billion** and net income attributable to Wabtec shareholders rose to **$336 million**, with six-month net sales reaching **$5.32 billion** and net income **$658 million** Key Income Statement Data (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $2,706 | $2,644 | $5,316 | $5,141 | | Gross profit | $938 | $874 | $1,838 | $1,689 | | Income from operations | $472 | $430 | $946 | $842 | | Net income attributable to Wabtec shareholders | $336 | $289 | $658 | $561 | | Diluted EPS | $1.96 | $1.64 | $3.84 | $3.17 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash provided by operating activities was **$400 million**, while investing activities used **$98 million** and financing activities provided **$454 million** Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $400 | $569 | | Net cash used for investing activities | $(98) | $(57) | | Net cash provided by (used for) financing activities | $454 | $(523) | | **Increase (decrease) in cash** | **$784** | **$(25)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information on the company's accounting policies, recent acquisitions, debt structure, and segment performance - The company's remaining performance obligations were approximately **$21.8 billion** as of June 30, 2025, with about **38%** expected to be recognized as revenue in the next 12 months[30](index=30&type=chunk) - Effective January 1, 2025, the Revolving Receivables Program was changed from a sale of receivables to a borrowing facility, with borrowings and repayments now classified under Financing activities[31](index=31&type=chunk) - The company announced definitive agreements to acquire Inspection Technologies for **~$1.78 billion** (closed July 1, 2025), Frauscher Sensor Technology for **~€675 million**, and Dellner Couplers for **~€890 million**[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - In April 2025, the company entered into a new 2025 Credit Agreement, increasing its revolving credit facility to **$2.0 billion** and providing a **$725 million** term loan facility[66](index=66&type=chunk) - In May 2025, the company issued **$500 million** of **4.90%** Senior Notes due 2030 and **$750 million** of **5.50%** Senior Notes due 2035[73](index=73&type=chunk) - Integration 3.0, a multi-year strategic initiative, is expected to incur restructuring charges of **$80 million to $100 million**, with approximately **$20 million** recorded to date[117](index=117&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides an analysis of the company's financial performance, liquidity, and capital resources, highlighting key drivers and strategic initiatives [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section details the company's consolidated net sales and income from operations for Q2 and YTD 2025, analyzing segment contributions and margin improvements Q2 2025 vs Q2 2024 Net Sales Change (in millions) | Segment | Q2 2024 Sales | Acquisitions | Foreign Exchange | Organic | Q2 2025 Sales | | :--- | :--- | :--- | :--- | :--- | :--- | | Freight | $1,920 | $18 | $(11) | $(8) | $1,919 | | Transit | $724 | $9 | $22 | $32 | $787 | | **Total** | **$2,644** | **$27** | **$11** | **$24** | **$2,706** | YTD 2025 vs YTD 2024 Net Sales Change (in millions) | Segment | YTD 2024 Sales | Acquisitions | Foreign Exchange | Organic | YTD 2025 Sales | | :--- | :--- | :--- | :--- | :--- | :--- | | Freight | $3,744 | $33 | $(37) | $80 | $3,820 | | Transit | $1,397 | $17 | $5 | $77 | $1,496 | | **Total** | **$5,141** | **$50** | **$(32)** | **$157** | **$5,316** | - Gross margin improved in Q2 2025 to **34.7%** from **33.0%** in Q2 2024, attributed to favorable mix, productivity, cost management, and restructuring savings[132](index=132&type=chunk) - Q2 2025 SG&A expenses included **$25 million** in transaction costs related to announced acquisitions[133](index=133&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, supported by operating cash flow, new credit facilities, and senior note issuances to fund strategic growth and operations Total Available Liquidity (in millions) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,486 | $706 | | Revolving Credit Facility | $2,000 | $1,500 | | Term Loan Facility | $250 | — | | Revolving Receivables Program | $350 | $350 | | **Total Available Liquidity** | **$4,086** | **$2,556** | - Operating cash flow was **$400 million** in the first six months of 2025, compared to **$569 million** in the prior-year period[163](index=163&type=chunk) - The company repurchased **$148 million** of stock in the first six months of 2025, with approximately **$852 million** remaining under the authorized repurchase plan as of June 30, 2025[164](index=164&type=chunk)[197](index=197&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material changes to its market risk exposure since December 31, 2024, referring to prior disclosures for details - There have been no material changes in the company's exposure to market risk since December 31, 2024[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[205](index=205&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[206](index=206&type=chunk) PART II—OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and stock repurchase activities [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal proceedings, including asbestos claims and an antitrust lawsuit, with management not expecting a material adverse effect - On June 12, 2025, a court dismissed antitrust claims filed by competitor Progress Rail against Wabtec related to the GE Transportation merger, though other claims remain[102](index=102&type=chunk) - The company is involved in various legal proceedings, including asbestos claims and a contract dispute involving its subsidiary Xorail, but does not expect a material adverse effect on its financial condition[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors were reported since the 2024 Annual Report on Form 10-K[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **245,919** shares for approximately **$50 million** in Q2 2025, with **$852 million** remaining under the authorization Q2 2025 Stock Repurchase Summary | Metric | Value | | :--- | :--- | | Total Shares Purchased | 245,919 | | Average Price Paid per Share | $203.32 | | Total Cost (approx.) | $50 million | | Remaining Authorization (as of June 30, 2025) | $852 million |

Financial Data and Key Metrics Changes - Sales for the second quarter were $2,710,000,000, reflecting a 2.3% increase compared to the prior year [14] - Adjusted EPS was up 15.8% year-over-year, reaching $2.27 [18] - Total cash flow from operations for the quarter was $209,000,000, with a twelve-month backlog of $8,200,000,000, up 11.9% [9][28] Business Line Data and Key Metrics Changes - Services revenue increased by 6%, driven by higher parts sales and increased modernization deliveries [19] - Equipment sales decreased by 4.2% due to a supplied part issue, which shifted approximately $60,000,000 of revenue to the second half of the year [19] - Transit segment sales rose by 8.7% to $787,000,000, supported by elevated infrastructure investment and global ridership [26] Market Data and Key Metrics Changes - North American traffic was up 2.5% in the quarter, although active locomotive fleets were down compared to last year [10] - The forecast for North American railcar builds was reduced from approximately 35,000 cars to 29,000 cars, representing a 31% reduction from last year [11] - Internationally, strong activity was noted across core markets such as Africa, Asia, Brazil, and the CIS, with significant investments in infrastructure [11] Company Strategy and Development Direction - The company is focused on integrating recent acquisitions, including Inspection Technologies, Downer Couplers, and Frauzer Sensor Technology, which are expected to enhance growth and profitability [12][13] - The company aims to drive sustained long-term profitable growth through strategic acquisitions and a disciplined approach to capital allocation [7][31] - The management emphasized the importance of maintaining a strong pipeline and backlog to support future growth [42][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to drive profitable growth despite a volatile economic environment [6][30] - The company anticipates stronger revenue growth in the second half of the year, driven by a recovery in locomotive deliveries and the impact of acquisitions [50] - Management highlighted the importance of cost management and operational efficiency in navigating current market challenges [17][22] Other Important Information - The company repurchased $50,000,000 of its shares and paid $44,000,000 in dividends during the quarter [29] - The liquidity position at the end of the quarter was $4,090,000,000, with a net debt leverage ratio of 1.4 times [28] Q&A Session Summary Question: Insights on rail industry dynamics and potential inefficiencies - Management sees significant opportunities for increased rail volumes, which would be beneficial for the industry [36][37] Question: Demand in international markets and impact of geopolitics - The pipeline remains strong, with a twelve-month backlog exceeding $8,000,000,000, indicating solid coverage for future growth [42] Question: Capital allocation strategy and future plans - The company will continue to focus on M&A for shareholder returns while also looking to reduce net debt leverage [45][46] Question: Shape of the second half of the year regarding revenue and margins - Management expects organic revenue growth to accelerate in the second half, with adjusted operating margins increasing year-over-year [49] Question: Impact of tariffs on business operations - The company does not anticipate a material impact from tariffs on 2025 earnings and is taking necessary actions to mitigate costs [68][70] Question: Update on Inspection Technologies acquisition and customer response - Early customer response has been positive, with expectations for improved reliability and availability in various sectors [74] Question: Regulatory environment and potential for automation - Management is closely monitoring regulatory changes and sees opportunities for increased efficiency and automation in the rail sector [60][100]

Financial Data and Key Metrics Changes - Sales for Q2 2025 were $2,710,000,000, reflecting a 2.3% increase year-over-year [6][13] - Adjusted EPS increased by 15.8% to $2.27 compared to the previous year [16] - Total cash flow from operations for the quarter was $209,000,000, lower year-over-year due to higher working capital [26] - Twelve-month backlog reached $8,200,000,000, up 11.9% [7][27] Business Line Data and Key Metrics Changes - Services revenue increased by 6%, driven by higher parts sales and modernization deliveries [18] - Equipment sales decreased by 4.2% due to a supply part issue, which shifted approximately $60,000,000 of revenue to the second half [18][14] - Transit segment sales rose by 8.7% to $787,000,000, supported by elevated infrastructure investment and global ridership [24] Market Data and Key Metrics Changes - North American traffic was up 2.5%, but active locomotive fleets were down compared to last year [8] - The forecast for North American railcar builds was reduced from approximately 35,000 cars to 29,000 cars, representing a 31% reduction from last year [9][10] - Internationally, strong activity was noted in markets such as Africa, Asia, Brazil, and the CIS, with significant investments in infrastructure [10] Company Strategy and Development Direction - The company is focused on integrating recent acquisitions, including Inspection Technologies, to enhance its product offerings and drive growth [5][12] - The strategy includes maintaining a disciplined approach to capital allocation while pursuing M&A opportunities to maximize shareholder returns [44] - The company aims to leverage its strong backlog and pipeline to drive profitable growth into 2025 and beyond [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to drive sustained long-term profitable growth despite a volatile economic environment [5][6] - The company anticipates stronger revenue growth in the second half of the year, driven by the resolution of supply issues and increased locomotive deliveries [15][49] - Management highlighted the importance of ongoing cost management and operational efficiency to navigate economic uncertainties [22][31] Other Important Information - The company repurchased $50,000,000 of its shares and paid $44,000,000 in dividends during the quarter [28] - The net debt leverage ratio ended the quarter at 1.4 times, below the stated range in anticipation of funding acquisitions [27] Q&A Session Summary Question: Insights on rail industry dynamics and potential inefficiencies - Management sees significant opportunities for increased rail volumes, which would be beneficial for the industry [36][37] Question: Demand in international markets and impact of geopolitics - The pipeline remains strong, with a twelve-month backlog exceeding $8,000,000,000, indicating solid coverage into 2025 [42] Question: Capital allocation strategy and future plans - The focus remains on M&A to drive shareholder returns, with plans to reduce net debt leverage following acquisitions [44] Question: Shape of the back half of the year regarding revenue and margins - Strong revenue growth is expected in the second half, with adjusted operating margins increasing year-over-year [48][49] Question: Update on tariffs and customer behavior - Tariffs are expected to have no material impact on 2025 earnings, with ongoing efforts to manage supply chain shifts [71] Question: Customer response to the Inspection Technologies acquisition - Customer feedback has been positive, with strong demand anticipated for the integrated business [74] Question: Regulatory environment and potential for automation - Management is closely monitoring regulatory changes and sees opportunities for increased efficiency and safety in rail operations [60][99]

Wabtec Financial Results & Company Highlights S EC O N D Q UA RT E R 2 0 2 5 1 Forward Looking Statements & Non-GAAP Financial Information This communication contains "forward-looking" statements as that term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, including statements regarding Wabtec's plans, objectives, expectations and in ...

| SALES | | GAAP DILUTED EARNINGS PER SHARE | | ADJUSTED DILUTED EARNINGS PER SHARE | | | --- | --- | --- | --- | --- | --- | | 2Q'25 | First Half '25 | 2Q'25 | First Half '25 | 2Q'25 | First Half '25 | | $2.71B | $5.32B | $1.96 | $3.84 | $2.27 | $4.55 | | +2.3% YOY | +3.4%YOY | +19.5% YOY | +21.1%YOY | +15.8% YOY | +18.2% YOY | Q2 2025 HIGHLIGHTS "The Wabtec team has delivered another strong quarter, highlighted by margin expansion and double digit earnings per share growth," said Rafael Santana, Wabtec's ...

Key Takeaways WAB's Q2 EPS estimate of $2.18 is up 0.46% in 60 days and 11.22% above last year's actual. Supply chain issues, economic and political uncertainty and high costs may pressure Q2 margins and revenues. Segmental strength aids top-line growth; WAB's 0.50% ESP and Zacks Rank #2 hint at a possible beat.Westinghouse Air Brake Technologies (WAB) ), operating as Wabtec Corporation, is scheduled to report second-quarter 2025 results on July 24, before market open.Wabtec has an encouraging earnings su ...

Core Viewpoint - Wall Street analysts expect Westinghouse Air Brake Technologies (WAB) to report quarterly earnings of $2.18 per share, reflecting an 11.2% year-over-year increase, with revenues projected at $2.77 billion, a 4.8% increase from the previous year [1]. Earnings Projections - Over the last 30 days, the consensus EPS estimate has been revised upward by 0.8%, indicating a collective reassessment by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue and Sales Estimates - Analysts predict 'Sales to external customers - Transit Segment' will reach $762.91 million, a 5.4% increase from the year-ago quarter [5]. - The estimated 'Sales to external customers - Freight Segment' is $2.01 billion, reflecting a 4.6% increase from the previous year [5]. Backlog Estimates - The total backlog is expected to reach $22.34 billion, compared to $22.08 billion from the same quarter last year [5]. - The average prediction for 'Backlog - Transit Group' is $4.42 billion, up from $4.15 billion in the same quarter last year [6]. - The consensus estimate for 'Backlog - Freight Group' stands at $17.92 billion, slightly down from $17.93 billion year-over-year [6]. Income from Operations - 'Adjusted Income from operations - Transit Segment' is projected at $104.42 million, compared to $91.00 million in the same quarter last year [7]. - 'Adjusted Income from operations - Freight Segment' is expected to be $487.43 million, up from $462.00 million year-over-year [7]. - The 'Income from operations - Freight Segment' is estimated at $434.84 million, compared to $391.00 million last year [8]. - The 'Income from operations - Transit Segment' is projected to reach $91.71 million, up from $82.00 million in the previous year [8]. Stock Performance - Over the past month, Wabtec shares have returned +6%, outperforming the Zacks S&P 500 composite's +5.4% change [8].