Financial Data and Key Metrics Changes - Sales in Q3 2025 were $2.9 billion, an increase of 8% compared to the previous year, driven by growth in both freight and transit segments [3][10] - Adjusted EPS rose by 16%, attributed to increased sales and margin expansion [3][11] - Total cash flow from operations for the quarter was $367 million, reflecting a decrease year-over-year due to higher tariffs and increased working capital [20][21] - The 12-month backlog reached $8.3 billion, up 8.4%, while the multi-year backlog hit an all-time high [3][10] Business Line Data and Key Metrics Changes - Equipment sales increased by 32% year-over-year, driven by higher new locomotive deliveries [12][14] - Digital intelligence sales surged by 45.6%, primarily due to the acquisition of Inspection Technologies [14] - Services revenue declined by 11.6% from the previous year, expected to continue decreasing in Q4 due to lower modernization deliveries [12][14] Market Data and Key Metrics Changes - North American traffic rose by 1.4%, although Wabtec's active locomotive fleets were slightly down compared to last year [4][5] - The North American railcar build forecast was reduced to approximately 28,000 cars, a 34% decrease from the previous year [5] - Internationally, strong activity was noted in markets such as Asia, India, Brazil, and CIS, with significant investments in infrastructure [5][6] Company Strategy and Development Direction - The company is focused on enhancing competitiveness and driving innovation through integration initiatives and portfolio optimization [9][10] - Wabtec aims to maintain leadership positions in segments with clear differentiation, targeting long-term success [9] - The strategy includes disciplined capital allocation to maximize shareholder returns while pursuing bolt-on acquisitions [21] Management's Comments on Operating Environment and Future Outlook - Management expressed caution in navigating a volatile economic landscape while remaining optimistic about the underlying business momentum [4][22] - The company raised its full-year adjusted EPS guidance to between $8.85 and $9.05, reflecting confidence in continued profitable growth [22][23] - Management highlighted a strong pipeline of opportunities and a commitment to product innovation and cost management [22][23] Other Important Information - The company secured a historic $4.2 billion order with Kazakhstan's National Railway, marking the largest single rail order in history [6][7] - The integration of Inspection Technologies is progressing positively, with expectations for cross-selling opportunities [66] Q&A Session Summary Question: Concerns about organic growth being in low single digits - Management noted that the 12-month backlog growth has outpaced last year, indicating stronger coverage for 2026 and a positive pipeline of opportunities, particularly in international markets [28][30] Question: Insights on services and modernization expectations - Management expects core services to grow in the 5% to 7% range, with variations tied to capital expenditure allocations between new locomotives and modernization [31] Question: Backlog and upcoming acquisitions - Management confirmed that the backlog is stronger for 2026 than the previous year, with acquisitions expected to provide inorganic growth [34][36] Question: Impact of tariffs on cash flow and P&L - Management explained that tariffs impact cash flow first, with a lag before affecting the P&L, and outlined a four-pronged approach to mitigate tariff impacts [41][43] Question: Digital product penetration and international growth - Management indicated that there are opportunities for digital product penetration in international markets, particularly in Kazakhstan and CIS countries [83]

Financial Performance - Wabtec's Q3 2025 sales reached $2.89 billion, an increase of 8.4% year-over-year[7] - GAAP earnings per share (EPS) increased by 11.0% year-over-year to $1.81, while adjusted EPS increased by 16.0% year-over-year to $2.32[7] - Operating margin was 17.0% on a GAAP basis and 21.0% on an adjusted basis, benefiting from sales growth and improved gross margin[7] - Cash flow from operations was $367 million, impacted by increased tariffs and higher working capital[7] - The company's 12-month backlog increased by 8.4% to $8.27 billion, providing strong visibility for 2025 and beyond[7] Segment Performance - Freight segment sales were $2.093 billion, up 8.4% year-over-year[35] - Transit segment sales were $793 million, up 8.2% year-over-year (5.2% on a constant currency basis)[35] - Freight segment operating margin was 19.8% on a GAAP basis and 24.5% on an adjusted basis[45] - Transit segment operating margin was 14.5% on a GAAP basis and 15.5% on an adjusted basis[48] Financial Outlook - Wabtec updated its 2025 financial guidance, projecting revenues between $10.925 billion and $11.225 billion and adjusted diluted EPS between $8.55 and $9.15[57] - The company expects a cash conversion rate of over 90%[57]

[Executive Summary & Q3 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q3%202025%20Highlights) Wabtec's strong Q3 2025 performance, with growth across key metrics, led to raised full-year guidance [CEO Statement](index=1&type=section&id=CEO%20Statement) CEO Rafael Santana highlighted strong Q3 2025 growth across key metrics, expressing confidence in future profitable growth - Wabtec delivered a **strong quarter** with continued growth in **backlog, sales, margin, and earnings**[3](index=3&type=chunk) - The company is encouraged by **future opportunities** and attributes success to **product innovation, disciplined cost management, focused execution, and customer partnerships**[3](index=3&type=chunk) - Confidence in delivering **profitable growth** into the future, even in a dynamic and uncertain economic environment[3](index=3&type=chunk)[4](index=4&type=chunk) [Key Financial & Operational Highlights](index=1&type=section&id=Key%20Financial%20%26%20Operational%20Highlights) Wabtec reported robust Q3 2025 financial performance, with significant sales and EPS growth, strong margins, and raised full-year guidance Key Financial & Operational Highlights | Metric | 3Q'25 | 3Q YTD '25 | | :--- | :--- | :--- | | Sales | $2.89B (+8.4% YOY) | $8.20B (+5.1% YOY) | | GAAP Diluted EPS | $1.81 (+11.0% YOY) | $5.64 (+17.5% YOY) | | Adjusted Diluted EPS | $2.32 (+16.0% YOY) | $6.88 (+17.4% YOY) | Key Financial & Operational Highlights | Metric | Value | | :--- | :--- | | Multi-year backlog | $25.6 billion | | 12-month backlog growth | 8.4% | | Sales Growth | 8.4% to $2.89 billion | | GAAP Operating Margin | 17.0% | | Adjusted Operating Margin | 21.0% (Up 1.3 pts) | | GAAP Earnings Per Share | $1.81 (Up 11.0%) | | Adjusted Earnings Per Share | $2.32 (Up 16.0%) | - Raised 2025 Adjusted Earnings Per Share guidance, up **18.4% at the midpoint**[5](index=5&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) Wabtec's Q3 2025 consolidated results showed 8.4% net sales growth, improved operating margins, and higher EPS [Third Quarter 2025 Consolidated Performance](index=2&type=section&id=Third%20Quarter%202025%20Consolidated%20Performance) Wabtec's Q3 2025 consolidated results showed 8.4% net sales growth, improved operating margins, and higher EPS, driven by segment performance Third Quarter 2025 Consolidated Performance | Metric | 2025 (Q3) | 2024 (Q3) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,886M | $2,663M | 8.4% | | GAAP Gross Margin | 34.7% | 33.0% | 1.7 pts | | Adjusted Gross Margin | 35.6% | 33.3% | 2.3 pts | | GAAP Operating Margin | 17.0% | 16.3% | 0.7 pts | | Adjusted Operating Margin | 21.0% | 19.7% | 1.3 pts | | GAAP Diluted EPS | $1.81 | $1.63 | 11.0% | | Adjusted Diluted EPS | $2.32 | $2.00 | 16.0% | | Cash Flow from Operations | $367M | $542M | $(175)M | | Operating Cash Flow Conversion | 83% | 129% | | - Sales increased **8.4%** driven by higher sales in the Freight segment (including Inspection Technologies acquisition) and the Transit segment[6](index=6&type=chunk) - GAAP and adjusted operating margins benefited from **higher sales** and **improved gross margins**, partially offset by higher operating expenses as a percent of revenue[8](index=8&type=chunk) - GAAP and adjusted EPS increased due to **higher sales, operating margin expansion**, and benefits from **prior quarter share repurchases**[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Analysis of Freight and Transit segments' performance, detailing sales and operating margin changes [Freight Segment Results](index=2&type=section&id=Freight%20Segment%20Results) Freight segment sales increased 8.4% in Q3 2025, driven by Equipment and Digital sales, with adjusted operating margin improving Freight Segment Results | Metric | 2025 (Q3) | 2024 (Q3) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,093M | $1,930M | 8.4% | | GAAP Gross Margin | 35.8% | 35.0% | 0.8 pts | | Adjusted Gross Margin | 37.0% | 35.1% | 1.9 pts | | GAAP Operating Margin | 19.8% | 20.2% | (0.4) pts | | Adjusted Operating Margin | 24.5% | 24.1% | 0.4 pts | - Freight segment sales increased **8.4%** in Q3 2025[9](index=9&type=chunk) - Equipment sales were up **32.0%** due to higher locomotive deliveries[9](index=9&type=chunk) - Digital sales were up **45.6%** driven by the acquisition of Inspection Technologies[9](index=9&type=chunk) - Services sales were down **11.6%** due to the timing of modernization deliveries[9](index=9&type=chunk) [Transit Segment Results](index=3&type=section&id=Transit%20Segment%20Results) Transit segment sales increased 8.2% in Q3 2025, driven by OE and aftermarket, with significant improvements in GAAP and adjusted operating margins Transit Segment Results | Metric | 2025 (Q3) | 2024 (Q3) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $793M | $733M | 8.2% | | GAAP Gross Margin | 31.7% | 28.2% | 3.5 pts | | Adjusted Gross Margin | 31.8% | 28.8% | 3.0 pts | | GAAP Operating Margin | 14.5% | 10.8% | 3.7 pts | | Adjusted Operating Margin | 15.5% | 12.8% | 2.7 pts | - Transit segment sales for Q3 2025 were up **8.2%** driven by higher OE and aftermarket sales[14](index=14&type=chunk) - GAAP operating margins increased due to **improved gross margins** and **lower operating expenses as a percent of revenue**[14](index=14&type=chunk) - Adjusted operating margins increased due to **improved gross margins**, partially offset by higher operating expenses as a percent of revenue[14](index=14&type=chunk) [Backlog, Cash Flow & Liquidity](index=3&type=section&id=Backlog%2C%20Cash%20Flow%20%26%20Liquidity) Review of Wabtec's robust backlog, cash flow from operations, and overall liquidity position as of Q3 2025 [Backlog Overview](index=3&type=section&id=Backlog%20Overview) Wabtec's backlog provides strong future visibility, with total and 12-month backlogs showing significant year-over-year growth Backlog Overview | Backlog Type | September 30, 2025 | September 30, 2024 | Change | | :--- | :--- | :--- | :--- | | 12-Month Backlog | $8,267M | $7,624M | 8.4% | | Total Backlog | $25,577M | $22,234M | 15.0% | - The company's multi-year backlog provides **strong visibility**, with the 12-month backlog **$643 million higher** than the prior year period[11](index=11&type=chunk) - The multi-year backlog was **$3.34 billion higher** than the prior year period, up **14.9%** excluding foreign currency exchange[11](index=11&type=chunk) [Cash Flow and Liquidity Summary](index=3&type=section&id=Cash%20Flow%20and%20Liquidity%20Summary) Q3 2025 operating cash flow decreased, impacted by tariffs and working capital, but Wabtec maintained strong liquidity and paid dividends Cash Flow and Liquidity Summary | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Cash provided by operations | $367M | $542M | $(175)M | - Cash provided by operations decreased partially due to **increased tariffs** and **higher working capital**[15](index=15&type=chunk) - At quarter-end, the company had **$528 million** in cash, cash equivalents, and restricted cash, and total debt of **$5.29 billion**[15](index=15&type=chunk) - Total available liquidity was **$2.75 billion**, including **$500 million** in cash and **$2.00 billion** available under credit facilities, plus **$250 million** from the Revolving Receivables Program[15](index=15&type=chunk) - The company paid **$43 million** in dividends during the quarter[15](index=15&type=chunk) [Financial Guidance](index=3&type=section&id=Financial%20Guidance) Wabtec's updated financial guidance for full year 2025, including adjusted EPS and revenue expectations [2025 Full Year Guidance](index=3&type=section&id=2025%20Full%20Year%20Guidance) Wabtec raised its 2025 adjusted EPS guidance, maintained revenue expectations, and anticipates over 90% operating cash flow conversion 2025 Full Year Guidance | Metric | 2025 Guidance | | :--- | :--- | | Adjusted EPS | $8.85 to $9.05 (up $0.10 at midpoint) | | Revenues | $10.925B - $11.225B (up 6.6% at midpoint) | - Wabtec expects operating cash flow conversion of **greater than 90 percent** for full year 2025[15](index=15&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) Overview of Wabtec Corporation and details regarding the Q3 2025 earnings conference call [About Wabtec](index=4&type=section&id=About%20Wabtec) Wabtec Corporation is a global leader in equipment and digital solutions for rail and industrial markets, committed to sustainable global movement - Wabtec Corporation is a **leading global provider** of equipment, systems, digital solutions, and services for freight and transit rail industries, as well as mining, marine, and industrial markets[21](index=21&type=chunk) - The company has been a leader in the rail industry for **over 155 years** and aims to achieve a **sustainable rail system globally**[21](index=21&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Wabtec hosted a conference call for analysts and investors on October 22, 2025, with webcast and audio replay details provided - Wabtec hosted a call with analysts and investors at **8:30 a.m. ET on October 22, 2025**[23](index=23&type=chunk) - Webcast and audio replay information was provided for **investor access**[23](index=23&type=chunk) [Legal & Non-GAAP Disclosures](index=6&type=section&id=Legal%20%26%20Non-GAAP%20Disclosures) Clarification of non-GAAP financial measures, forward-looking statements, and contact information [Non-GAAP Financial Information](index=6&type=section&id=Non-GAAP%20Financial%20Information) Wabtec's earnings release includes non-GAAP financial measures as supplemental information, with reconciliations to GAAP results - Wabtec uses non-GAAP financial performance measures including **adjusted gross profit, adjusted operating margin, EBITDA, adjusted EBITDA, and adjusted EPS**[24](index=24&type=chunk) - These non-GAAP measures are considered **useful supplemental information** but are not presented in accordance with GAAP and should not be considered in isolation[24](index=24&type=chunk) - Reconciliation tables are included to detail how **adjusted results relate to GAAP results**[24](index=24&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This communication contains forward-looking statements subject to various risks and uncertainties, with actual results potentially differing due to external factors - The communication contains **forward-looking statements** regarding Wabtec's future plans, objectives, expectations, and intentions[25](index=25&type=chunk) - These statements are subject to **risks, uncertainties, and assumptions**, and actual results may vary materially[25](index=25&type=chunk) - Important factors that could cause actual results to differ include **changes in economic conditions, customer strategies, acquisition costs, regulatory regimes, and global market disruptions**[25](index=25&type=chunk) [Investor & Media Contacts](index=7&type=section&id=Investor%20%26%20Media%20Contacts) Contact information for Wabtec's Investor Relations and Media Relations is provided for inquiries - Investor Contact: **Kyra Yates / Kyra.Yates@wabtec.com / 817-349-2735**[26](index=26&type=chunk) - Media Contact: **Tim Bader / Tim.Bader@wabtec.com / 682-319-7925**[26](index=26&type=chunk) [Financial Statements (GAAP)](index=8&type=section&id=Financial%20Statements%20(GAAP)) Wabtec's GAAP condensed consolidated statements of income, balance sheets, and cash flows for relevant periods [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Wabtec's GAAP consolidated statements of income show increased net sales, gross profit, and net income for Q3 and YTD 2025 Condensed Consolidated Statements of Income | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,886M | $2,663M | $8,202M | $7,804M | | Gross profit | $1,002M | $880M | $2,840M | $2,569M | | Gross profit as a % of Net sales | 34.7% | 33.0% | 34.6% | 32.9% | | Income from operations | $491M | $433M | $1,437M | $1,275M | | Income from operations as a % of Net sales | 17.0% | 16.3% | 17.5% | 16.3% | | Net income attributable to Wabtec shareholders | $310M | $283M | $968M | $844M | | Diluted EPS | $1.81 | $1.63 | $5.64 | $4.80 | Condensed Consolidated Statements of Income | Segment | 3 Months Ended Sep 30, 2025 Net Sales | 3 Months Ended Sep 30, 2024 Net Sales | 9 Months Ended Sep 30, 2025 Net Sales | 9 Months Ended Sep 30, 2024 Net Sales | | :--- | :--- | :--- | :--- | :--- | | Freight Net sales | $2,093M | $1,930M | $5,913M | $5,674M | | Freight Income from operations | $414M | $390M | $1,249M | $1,149M | | Freight Operating margin | 19.8% | 20.2% | 21.1% | 20.2% | | Transit Net sales | $793M | $733M | $2,289M | $2,130M | | Transit Income from operations | $115M | $79M | $314M | $235M | | Transit Operating margin | 14.5% | 10.8% | 13.7% | 11.0% | Condensed Consolidated Statements of Income | Backlog Type | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :--- | :--- | :--- | :--- | | Freight Total | $20,907M | $17,136M | $17,756M | | Transit Total | $4,670M | $4,692M | $4,478M | | Wabtec Total | $25,577M | $21,828M | $22,234M | | Freight 12-month | $6,085M | $6,024M | $5,589M | | Transit 12-month | $2,182M | $2,186M | $2,035M | | Wabtec 12-month | $8,267M | $8,210M | $7,624M | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Wabtec's consolidated balance sheet as of September 30, 2025, shows increased total assets, liabilities, and equity, driven by asset and debt changes Condensed Consolidated Balance Sheets | Metric | September 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $528M | $715M | | Receivables, net | $2,198M | $1,702M | | Inventories, net | $2,747M | $2,314M | | Total current assets | $5,788M | $4,943M | | Goodwill | $9,853M | $8,710M | | Other intangible assets, net | $3,546M | $2,934M | | Total Assets | $21,527M | $18,702M | | Current liabilities | $4,064M | $3,792M | | Long-term debt | $5,034M | $3,480M | | Total Liabilities | $10,432M | $8,569M | | Total Equity | $11,095M | $10,133M | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased for YTD Q3 2025, with significant cash used in investing and provided by financing, leading to a net cash decrease Condensed Consolidated Statements of Cash Flows | Metric | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :--- | :--- | :--- | | Net income | $979M | $854M | | Net cash provided by operating activities | $767M | $1,111M | | Net cash used for investing activities | $(1,887)M | $(106)M | | Net cash provided by (used for) financing activities | $907M | $(1,209)M | | Decrease in cash | $(187)M | $(210)M | | Cash, cash equivalents and restricted cash, end of period | $528M | $410M | [Non-GAAP Reconciliations](index=12&type=section&id=Non-GAAP%20Reconciliations) Detailed reconciliations of GAAP to adjusted results for various periods, accounting for restructuring and transaction costs [Consolidated Adjusted Results Reconciliation](index=12&type=section&id=Consolidated%20Adjusted%20Results%20Reconciliation) Wabtec provides detailed reconciliations of GAAP to adjusted results for various periods, accounting for restructuring, transaction costs, and amortization Q3 2025 Consolidated Reconciliation (Selected Metrics) | Metric | Reported Results | Adjustments | Adjusted Results | | :--- | :--- | :--- | :--- | | Net Sales | $2,886M | — | $2,886M | | Gross Profit | $1,002M | $26M | $1,028M | | Operating Expenses | $(511)M | $90M | $(421)M | | Income from Operations | $491M | $116M | $607M | | Net Income attributable to Wabtec shareholders | $310M | $88M | $398M | | EPS | $1.81 | $0.51 | $2.32 | YTD 2025 Consolidated Reconciliation (Selected Metrics) | Metric | Reported Results | Adjustments | Adjusted Results | | :--- | :--- | :--- | :--- | | Net Sales | $8,202M | — | $8,202M | | Gross Profit | $2,840M | $32M | $2,872M | | Operating Expenses | $(1,403)M | $275M | $(1,128)M | | Income from Operations | $1,437M | $307M | $1,744M | | Net Income attributable to Wabtec shareholders | $968M | $211M | $1,179M | | EPS | $5.64 | $1.24 | $6.88 | Q3 2024 Consolidated Reconciliation (Selected Metrics) | Metric | Reported Results | Adjustments | Adjusted Results | | :--- | :--- | :--- | :--- | | Net Sales | $2,663M | — | $2,663M | | Gross Profit | $880M | $7M | $887M | | Operating Expenses | $(447)M | $84M | $(363)M | | Income from Operations | $433M | $91M | $524M | | Net Income attributable to Wabtec shareholders | $283M | $68M | $351M | | EPS | $1.63 | $0.37 | $2.00 | [EBITDA Reconciliation](index=15&type=section&id=EBITDA%20Reconciliation) Wabtec provides reconciliations for EBITDA and Adjusted EBITDA, derived from income from operations by adjusting for non-cash and restructuring costs Q3 2025 EBITDA Reconciliation | Metric | Amount (in millions) | | :--- | :--- | | Reported Income from Operations | $491 | | Other Income (Expense) | $(1) | | Depreciation & Amortization | $127 | | **EBITDA** | **$617** | | Restructuring & Transaction Costs | $41 | | **Adjusted EBITDA** | **$658** | YTD 2025 EBITDA Reconciliation | Metric | Amount (in millions) | | :--- | :--- | | Reported Income from Operations | $1,437 | | Other Income (Expense) | $21 | | Depreciation & Amortization | $361 | | **EBITDA** | **$1,819** | | Restructuring & Transaction Costs | $55 | | **Adjusted EBITDA** | **$1,874** | Q3 2024 EBITDA Reconciliation | Metric | Amount (in millions) | | :--- | :--- | | Reported Income from Operations | $433 | | Other Income (Expense) | $(3) | | Depreciation & Amortization | $133 | | **EBITDA** | **$563** | | Restructuring Costs | $4 | | **Adjusted EBITDA** | **$567** | [Supplemental Segment Data](index=16&type=section&id=Supplemental%20Segment%20Data) Additional segment-level data, including sales by product line and reconciliation of net sales changes [Sales by Product Line](index=16&type=section&id=Sales%20by%20Product%20Line) Wabtec's Q3 and YTD 2025 sales by product line show varied performance, with Freight's Equipment and Digital growing, and Transit's OE and Aftermarket growing Freight Segment Sales by Product Line (Q3) | Product Line | 2025 (Q3) | 2024 (Q3) | | :--- | :--- | :--- | | Services | $744M | $842M | | Equipment | $677M | $513M | | Components | $375M | $371M | | Digital Intelligence | $297M | $204M | | **Total Freight Segment** | **$2,093M** | **$1,930M** | Transit Segment Sales by Product Line (Q3) | Product Line | 2025 (Q3) | 2024 (Q3) | | :--- | :--- | :--- | | Original Equipment Manufacturer | $367M | $349M | | Aftermarket | $426M | $384M | | **Total Transit Segment** | **$793M** | **$733M** | Freight Segment Sales by Product Line (YTD) | Product Line | 2025 (YTD) | 2024 (YTD) | | :--- | :--- | :--- | | Services | $2,388M | $2,317M | | Equipment | $1,699M | $1,609M | | Components | $1,157M | $1,169M | | Digital Intelligence | $669M | $579M | | **Total Freight Segment** | **$5,913M** | **$5,674M** | [Segment Adjusted Results Reconciliation](index=17&type=section&id=Segment%20Adjusted%20Results%20Reconciliation) Segment-level reconciliations for Freight and Transit show adjustments to gross profit and income from operations, leading to higher adjusted margins Freight Segment Adjusted Results (Q3) | Metric | Reported (2025) | Adjusted (2025) | Reported (2024) | Adjusted (2024) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $750M | $775M | $673M | $675M | | Income from Operations | $414M | $513M | $390M | $467M | | Gross Margin | 35.8% | 37.0% | 35.0% | 35.1% | | Operating Margin | 19.8% | 24.5% | 20.2% | 24.1% | Transit Segment Adjusted Results (Q3) | Metric | Reported (2025) | Adjusted (2025) | Reported (2024) | Adjusted (2024) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $252M | $253M | $207M | $212M | | Income from Operations | $115M | $123M | $79M | $93M | | Gross Margin | 31.7% | 31.8% | 28.2% | 28.8% | | Operating Margin | 14.5% | 15.5% | 10.8% | 12.8% | Freight Segment Adjusted Results (YTD) | Metric | Reported (2025) | Adjusted (2025) | Reported (2024) | Adjusted (2024) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $2,132M | $2,161M | $1,967M | $1,977M | | Income from Operations | $1,249M | $1,481M | $1,149M | $1,368M | | Gross Margin | 36.1% | 36.5% | 34.7% | 34.8% | | Operating Margin | 21.1% | 25.0% | 20.2% | 24.1% | [Reconciliation of Changes in Net Sales by Segment](index=18&type=section&id=Reconciliation%20of%20Changes%20in%20Net%20Sales%20by%20Segment) Net sales changes by segment for Q3 and YTD 2025 highlight sales growth drivers, including acquisitions and organic growth, with minor impacts from other factors Q3 Net Sales Change by Segment | Driver | Freight ($M) | Transit ($M) | Consolidated ($M) | | :--- | :--- | :--- | :--- | | 2024 Net sales | $1,930 | $733 | $2,663 | | Acquisitions | $128 | $6 | $134 | | Portfolio Optimization (Divestitures/Exits) | $(7) | $(6) | $(13) | | Foreign Exchange | $1 | $22 | $23 | | Organic | $41 | $38 | $79 | | **2025 Net sales** | **$2,093** | **$793** | **$2,886** | | Change ($) | $163 | $60 | $223 | | Change (%) | 8.4% | 8.2% | 8.4% | YTD Net Sales Change by Segment | Driver | Freight ($M) | Transit ($M) | Consolidated ($M) | | :--- | :--- | :--- | :--- | | 2024 Net sales | $5,674 | $2,130 | $7,804 | | Acquisitions | $161 | $23 | $184 | | Portfolio Optimization (Divestitures/Exits) | $(34) | $(17) | $(51) | | Foreign Exchange | $(36) | $27 | $(9) | | Organic | $148 | $126 | $274 | | **2025 Net sales** | **$5,913** | **$2,289** | **$8,202** | | Change ($) | $239 | $159 | $398 | | Change (%) | 4.2% | 7.5% | 5.1% | [Cash Conversion Calculation](index=19&type=section&id=Cash%20Conversion%20Calculation) Wabtec's cash conversion rate decreased in Q3 and YTD 2025, indicating lower efficiency in converting earnings to cash flow [Cash Conversion Calculation](index=19&type=section&id=Cash%20Conversion%20Calculation) Wabtec's cash conversion rate decreased in Q3 and YTD 2025, indicating lower efficiency in converting earnings into operating cash flow Cash Conversion Rates | Period | Reported Cash from Operations | Net Income | Depreciation & Amortization | Cash Conversion | | :--- | :--- | :--- | :--- | :--- | | Q3 2025 | $367M | $313M | $128M | 83% | | Q3 YTD 2025 | $767M | $979M | $365M | 57% | | Q3 2024 | $542M | $286M | $134M | 129% | | Q3 YTD 2024 | $1,111M | $854M | $375M | 90% |

Core Insights - Wabtec Corporation reported third quarter 2025 GAAP earnings per diluted share of $1.81, reflecting an 11.0% increase compared to the third quarter of 2024 [1] - Adjusted earnings per diluted share were $2.32, marking a 16.0% rise year-over-year [1] - The company's third quarter sales reached $2.89 billion, with cash from operations amounting to $367 million [1] - The CEO, Rafael Santana, highlighted the strong performance of the company, noting growth in backlog, sales, margin, and earnings [1]

Core Insights - Wabtec is expected to report quarterly earnings on October 22, 2025, with analysts forecasting an EPS of $2.27 and revenue of $2.88 billion [1][2] Earnings Performance - The anticipated EPS of $2.27 indicates a 13.5% increase year-over-year, reflecting strong financial performance [2][6] - The upward revision of 0.44% in EPS over the past 60 days shows growing confidence among analysts [2] Revenue Growth - Revenue projections suggest an 8.1% year-over-year increase to $2.88 billion, driven by growth in the Freight and Transit segments, which are expected to grow by 7.8% and 5.9%, respectively [3][6] Financial Metrics - Wabtec's P/E ratio stands at 29.02, indicating that investors are willing to pay a premium for earnings [4][6] - The company has a price-to-sales ratio of 3.17 and an enterprise value to sales ratio of 3.49, highlighting its valuation relative to sales [4] - A debt-to-equity ratio of 0.44 suggests moderate debt levels, while a current ratio of 1.76 indicates a strong ability to cover short-term liabilities [5][6] Market Position - Positive Earnings ESP and a Zacks Rank 2 position Wabtec favorably for its upcoming earnings release [5]

Core Viewpoint - The analysis compares Herc Holdings (HRI) and Westinghouse Air Brake Technologies (WAB) to determine which stock is more attractive to value investors, highlighting HRI as the superior option based on valuation metrics [1][6]. Valuation Metrics - HRI has a forward P/E ratio of 18.42, while WAB has a forward P/E of 21.82, indicating HRI is more attractively priced [5]. - HRI's PEG ratio is 1.40, compared to WAB's PEG ratio of 1.50, suggesting HRI offers better value relative to its expected earnings growth [5]. - HRI's P/B ratio is 2.18, whereas WAB's P/B ratio is 3.06, further supporting HRI's stronger valuation profile [6]. Earnings Outlook - Both HRI and WAB currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks for both companies [3].

Key Takeaways Wabtec's Q3 earnings estimates rose to $2.27, implying a 13.5% gain from the year-ago quarter's actual.WAB's Freight and Transit revenues are expected to grow 7.8% and 5.9%, respectively, in 3Q25.WAB has a positive Earnings ESP and a Zacks Rank #2, signaling an earnings beat in Q3.Westinghouse Air Brake Technologies (WAB) , operating as Wabtec Corporation, is scheduled to report third-quarter 2025 results on Oct. 22, 2025, before market open.The Zacks Consensus Estimate for WAB’s third-quarter ...

Core Viewpoint - Westinghouse Air Brake Technologies (WAB) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of exceeding expectations [1]. Company Performance - WAB has a solid track record of surpassing earnings estimates, particularly in the last two quarters, with an average surprise of 8.78% [2]. - In the most recent quarter, WAB reported earnings of $2.27 per share against an expectation of $2.18, resulting in a surprise of 4.13%. In the previous quarter, the company reported $2.28 per share compared to an estimate of $2.01, achieving a surprise of 13.43% [3]. Earnings Estimates - Recent estimates for WAB have been trending upward, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [6]. - The current Earnings ESP for WAB is +1.32%, reflecting increased analyst optimism regarding its near-term earnings potential. Coupled with a Zacks Rank of 2 (Buy), this suggests a high probability of another earnings beat [9]. Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced positive surprises nearly 70% of the time, indicating a strong correlation between these metrics and earnings performance [7]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being more reflective of recent analyst revisions [8].

Core Insights - FedEx Corporation (FDX) and Westinghouse Air Brake Technologies Corporation (WAB) have both announced dividend increases this year, demonstrating a commitment to shareholder returns despite economic uncertainties [1][10]. Dividend Increases - Wabtec's board approved a 25% dividend hike, raising its quarterly cash dividend to $0.25 per share ($1.00 annualized) from $0.20 ($0.80 annualized) [3]. - FedEx's board approved a dividend increase, raising its quarterly cash dividend to $1.45 per share ($5.80 annualized) from $1.38 ($5.52 annualized) [3]. Price Performance Comparison - WAB has achieved a 2.4% year-to-date gain, while FDX has experienced a double-digit decline [5]. - FDX's poor performance is attributed to revenue weakness due to geopolitical uncertainty and high inflation affecting consumer sentiment and growth expectations [8]. - WAB's strength is linked to its focus on new technologies, restructuring actions, and cost-cutting initiatives [9]. Earnings Estimates - The Zacks Consensus Estimate for WAB's 2025 and 2026 sales indicates year-over-year increases of 6.7% and 5.8%, respectively, with EPS estimates trending upward [13]. - The Zacks Consensus Estimate for FDX's current year sales implies a 4.4% year-over-year increase, but EPS estimates have been trending downward [14]. Valuation Comparison - WAB is trading at a forward sales multiple of 2.85, above its 5-year median of 2.07, indicating a higher valuation [15]. - FDX has a forward sales multiple of 0.58, below its 5-year median of 0.69, and carries a Value Score of A, while WAB has a Value Score of D [15]. Conclusion - WAB's better price performance and upward earnings estimate revisions suggest a stronger position compared to FDX, which is currently ranked lower [17][18].

Core Viewpoint - Wabtec Corporation (WAB) appears to be overvalued based on its forward price-to-sales ratio, trading at a premium compared to the industry average [1][2]. Valuation Metrics - WAB has a forward 12-month price-to-sales ratio (P/S-F12M) of 2.95X, significantly higher than the industry average of 2.07X over the past five years [2]. - The company's P/S-F12M ratio exceeds the median level of 2.06X during the same period, indicating an unattractive valuation [2]. Stock Performance - Wabtec's shares have increased by 10.6% over the past year, outperforming the Zacks Transportation - Equipment and Leasing industry's decline of 13.6% [9]. - However, WAB's performance is less favorable compared to Ryder Corporation (R) within the same timeframe [9]. Operational Challenges - The company faces ongoing supply-chain disruptions, high commodity costs, and labor shortages, which are impacting its operating expenses [5][8]. - Total operating expenses rose by 9.7% year-over-year in 2023, with a further increase of 4.8% projected for 2024 [5]. - In the first half of 2025, total operating expenses increased by 5.3% year-over-year to $892 million [5]. International Exposure - Wabtec has significant operations outside the United States, making it vulnerable to foreign exchange volatility and economic uncertainties [6]. Positive Developments - Wabtec is focusing on new technologies to enhance safety, cost efficiency, and reliability in railroads, which supports the modernization of global rail fleets [12]. - The company is implementing cost-cutting measures and optimizing its product portfolio to improve profitability [13]. - Strong free cash flow generation enables consistent dividend payments and share buybacks, which are expected to boost investor confidence [14]. Earnings Estimates - The Zacks Consensus Estimate for WAB's earnings has been revised upward for the remaining quarters of 2025 and for full-year 2025 and 2026 [15]. - The current estimates for Q1 and Q2 of 2025 are $2.27 and $2.06, respectively, with full-year estimates of $8.89 and $10.01 for 2025 and 2026 [15]. Investment Outlook - The combination of new technology focus, restructuring actions, and shareholder-friendly initiatives has led to WAB's premium valuations, as investors anticipate strong future performance [16]. - The positives surrounding WAB outweigh concerns related to economic and political uncertainties, suggesting that investors may consider adding WAB stock to their portfolios for potential returns [17].