Group 1: Acquisition Details - Wabtec Corporation is acquiring Dellner Couplers for $960 million in cash, financed through cash on hand and short-term debt, subject to customary closing conditions and regulatory approvals [1] - Dellner Couplers specializes in safety-critical train connection systems and services, with a global base of nearly 100,000 couplers and 12,500 gangways, serving over 200 customers across 13 countries [2] Group 2: Financial Implications - The acquisition is expected to generate immediate shareholder value, with an accretive growth profile and adjusted earnings before interest and taxes margins, along with an anticipated return on invested capital over time [3] - The purchase price represents an estimated multiple of 12.5x projected 2025 earnings before interest, taxes, depreciation, and amortization, adjusted for transaction costs and projected run-rate cost synergies of $22 million over three years [4] - Dellner Couplers is projected to generate nearly $250 million in revenues in 2025 [4] Group 3: Strategic Importance - The acquisition is a strategic move for Wabtec to enhance its portfolio of mission-critical passenger rail systems, capitalizing on the growth in the passenger rail market [5] - Wabtec's CEO highlighted that Dellner Couplers will provide significant synergies by complementing the core Transit systems portfolio and leveraging strong service capabilities, aligning with the company's growth strategies [6] Group 4: Market Performance - Wabtec currently holds a Zacks Rank 3 (Hold) and has seen its shares gain 27.9% over the past year, outperforming its transportation equipment and leasing industry and the S&P 500 [7]

Core Viewpoint - EQT has signed a definitive agreement to sell Dellner Couplers to Wabtec Corporation for approximately EUR 890 million, highlighting Dellner's significant role in the rail industry and its growth potential under Wabtec's platform [1][4]. Company Overview - Dellner Couplers is a global leader in train connection systems, providing safety-critical components and services to rail manufacturers and operators worldwide, with a strong presence in Europe, North America, and Asia [2]. - Founded in 1941 in Vika, Sweden, Dellner has evolved from a family-owned business into a trusted partner in the global rail industry, offering a diverse product portfolio that includes couplers, gangways, dampers, and aftermarket services [2]. Recent Developments - Since EQT's acquisition of Dellner in 2019, the company has enhanced its commercial organization and product portfolio through strategic acquisitions and investments in research and development [3]. - Dellner has improved its sustainability credentials by implementing higher environmental standards across its operations and supply chain, which has strengthened its market position [3]. Leadership Insights - Nils Ketter from EQT emphasized Dellner's importance in the train connection market and its contribution to greener mobility, expressing gratitude for the team's dedication and innovation [4]. - Fredric Håkansson, CEO of Dellner, acknowledged EQT's support during a transformational period and expressed optimism about future innovations and customer solutions as part of Wabtec [4]. Transaction Details - The transaction is subject to customary conditions and regulatory approvals, indicating a standard process for such corporate acquisitions [4].

Core Viewpoint - Westinghouse Air Brake Technologies (WAB) has experienced a decline of approximately 10.3% in share price over the past month, underperforming the S&P 500, raising questions about the potential for a breakout or continued negative trend leading up to the next earnings release [1]. Estimates Movement - Estimates revision for Wabtec has remained flat over the past month, indicating no significant changes in analyst expectations [2]. VGM Scores - Wabtec currently holds a Growth Score of B, but has a low Momentum Score of F. The stock also received a grade of D for value, placing it in the bottom 40% for this investment strategy. The overall aggregate VGM Score for the stock is C, which is relevant for investors not focused on a single strategy [3]. Outlook - Wabtec has a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return from the stock in the upcoming months [4].

Financial Performance - Wabtec's net sales for 2024 increased by $710 million, or 7.3%, to $10.39 billion compared to 2023, driven by organic sales growth of $662 million across both Freight and Transit segments [184]. - Wabtec's gross profit for 2024 was $3.37 billion, reflecting an increase from $2.94 billion in 2023, with a gross margin improvement attributed to contract escalation clauses and operational efficiencies [186]. - The cost of sales for 2024 was $7.02 billion, representing a 4.3% increase from 2023, with cost of sales as a percentage of net sales improving to 67.6% from 69.6% [186]. - Wabtec's net income attributable to shareholders for 2024 was $1.06 billion, up from $815 million in 2023 [181]. - Cash provided by operating activities was $1,834 million in 2024, compared to $1,201 million in 2023, reflecting a $242 million increase from net income [202]. - The Company reported net sales of $5,948 million and a gross profit of $2,399 million for the year ended December 31, 2024 [215]. - Net income attributable to Wabtec shareholders was $788 million for the year ended December 31, 2024 [215]. - The effective income tax rate decreased from 24.5% in 2023 to 24.3% in 2024, primarily due to changes in valuation allowances and audit closures [190]. Strategic Initiatives - Wabtec announced a new strategic initiative, Integration 3.0, targeting synergies of $100 million to $125 million by 2028, with expected charges of $125 million to $155 million [169]. - The company made four strategic acquisitions in 2024 for a combined purchase price of approximately $168 million, enhancing its capabilities in various segments [175]. - The company anticipates financing the acquisition of Inspection Technologies for $1.78 billion through cash on hand and credit facilities, expected to close by mid-2025 [179]. Segment Performance - Freight Segment net sales increased by $545 million, or 7.9%, to $7,468 million for the year ended December 31, 2024, driven by a $618 million increase in sales of goods [192]. - Freight Segment organic sales increased by $499 million, primarily from higher Equipment sales and increased mining sales [193]. - Transit Segment net sales increased by $165 million, or 6.0%, to $2,919 million for the year ended December 31, 2024, supported by strong Aftermarket and Original Equipment Manufacturing sales [197]. Expenses and Liabilities - Total operating expenses increased by $79 million, or 4.7%, for the year ended December 31, 2024, compared to 2023, with operating expenses as a percentage of net sales decreasing from 17.3% to 16.9% [187]. - The company incurred approximately $28 million and $49 million in one-time restructuring charges related to Integration 2.0 for the years ended December 31, 2024 and 2023, respectively [166]. - Long-term debt rose to $2,962 million in 2024 compared to $2,739 million in 2023 [216]. - The Company has a total of $5,528 million in contractual obligations and off-balance sheet arrangements as of December 31, 2024 [223]. Cash and Financing - As of December 31, 2024, the company held approximately $715 million in cash, cash equivalents, and restricted cash, with $417 million in the United States and $298 million held outside [208]. - Interest expense, net, decreased by $17 million to $201 million for the year ended December 31, 2024, primarily due to lower weighted average debt balances [188]. - The Company entered into an uncommitted bilateral money market line credit agreement with a borrowing capacity of $150 million during Q3 2024 [212]. - The Company has a revolving receivables facility allowing the sale of up to $350 million of certain receivables [210]. - The net cash remitted from the revolving receivables program was $(20) million for 2024 and $(60) million for 2023 [210]. Shareholder Information - The Company anticipates shareholder dividends of approximately $171 million beginning in 2025 [229]. - The Company reported a net loss attributable to Wabtec shareholders of $(209) million for the Euro Notes issuer and guarantor for the year ended December 31, 2024 [220]. Accounting and Risk Management - The company uses the first-in, first-out (FIFO) method for inventory valuation, with reserves established for excess, slow-moving, and obsolete inventories [238]. - The company accounts for business acquisitions under ASC 805, with excess purchase price recognized as goodwill [241]. - Goodwill and indefinite-lived intangible assets are tested for impairment at least annually, with three reporting units identified for evaluation [244]. - Warranty reserves are established as a percentage of sales based on historical experience, with specific reserves for known warranty issues [247]. - The company recognizes revenue according to ASC 606, with long-term customer agreements requiring revenue to be recognized over time [253]. - The company is exposed to interest rate risk related to variable-rate debt, with outstanding variable-rate debt limited to amounts borrowed under specific credit agreements [257]. - The company mitigates foreign currency exchange rate risk by entering into foreign currency forward contracts [258].

Core Insights - Westinghouse Air Brake Technologies Corporation (WAB), known as Wabtec, reported Q4 2024 earnings per share (EPS) of $1.68, missing the Zacks Consensus Estimate of $1.73, but showing a 9.1% year-over-year improvement due to higher sales and operating margin expansion [1][3] - Total revenues for the quarter were $2.58 billion, slightly below the Zacks Consensus Estimate of $2.59 billion, with a year-over-year growth of 2.3% driven by the Transit segment [2][3] Financial Performance - The Freight segment net sales reached $1.79 billion, a 0.3% year-over-year increase, but fell short of expectations of $1.84 billion, with an adjusted operating margin of 19.4% [4] - The Transit segment saw net sales grow by 7.1% year over year to $789 million, exceeding estimates of $757 million, with an adjusted operating margin rising to 16.4% from 14.9% in Q4 2023 [5] Operating Metrics - Total operating expenses increased by $7 million year-over-year to $463 million, while the operating ratio improved to 17.9% from 18.1% [6] - Cash, cash equivalents, and restricted cash at the end of Q4 were $715 million, up from $620 million at the end of 2023, while long-term debt rose to $3.48 billion from $3.29 billion [6] Shareholder Returns - During the quarter, Wabtec repurchased shares worth $123 million and approved a 25% increase in the quarterly cash dividend to 25 cents per share [7] 2025 Guidance - Wabtec expects 2025 revenues to be in the range of $10.725 billion to $11.025 billion, below the Zacks Consensus Estimate of $10.83 billion, with adjusted EPS guidance for 2025 set between $8.35 and $8.75, also below the consensus estimate of $8.59 [3][8]

Financial Data and Key Metrics Changes - The company reported a top line growth of 7% and adjusted EPS growth of 28% for the year [7][8] - Q4 sales were $2.58 billion, reflecting a 2.3% increase year-over-year, with adjusted EPS up 9.1% [12][28] - Cash flow from operations for Q4 was $723 million, resulting in a cash conversion rate of 212% [13][41] - The twelve-month backlog stood at $7.7 billion, indicating continued momentum [13][23] Business Line Data and Key Metrics Changes - Services sales decreased by 15.9% in Q4, while equipment sales increased by 41.8% [30][31] - The Transit segment saw a sales increase of 7.1% in Q4, with adjusted operating income up 1.5 percentage points [39][40] - Digital Intelligence sales were down 1.4% due to softness in North America, but international sales partially offset this decline [32][90] Market Data and Key Metrics Changes - North American railcar builds were down to approximately 42,000 cars for 2024, with an industry outlook for 2025 projecting a nearly 17% decline [15] - Internationally, strong activity was noted in markets such as Latin America, Africa, and Asia, with significant investments in infrastructure [16][20] - Ridership levels in the transit sector are increasing, supporting fleet expansion and renewals [17] Company Strategy and Development Direction - The company is focused on driving continuous improvement and delivering value to customers, with a new five-year long-term guidance announced [8][51] - Integration 3.0 and portfolio optimization initiatives are expected to support over 350 basis points of margin improvement over the next five years [10][58] - The company aims for mid-single digit organic revenue growth and double-digit EPS growth over the next five years [53][54] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive profitable growth, citing strong customer demand and a solid backlog [49][50] - The company anticipates cash flow conversion to remain above 90% despite a previous year of 117% [50] - Management highlighted the resilience of the business amid geopolitical issues and inflation, with a focus on cost management and productivity [23][131] Other Important Information - The Board of Directors approved a 25% increase in the quarterly dividend and authorized an additional $1 billion for share repurchases [11][43] - The company has executed against its Integration 2.0 initiative, achieving significant cost savings and operational improvements [44][45] Q&A Session Summary Question: Strategic question on long-term framework and margin improvements - Management confirmed that the new five-year plan aims for over 350 basis points of margin expansion, with a focus on cost management and innovation [64][70] Question: Margin opportunity and incremental upside - Management highlighted a strong pipeline of opportunities and emphasized the importance of cost actions and simplification for margin expansion [78][82] Question: Digital market outlook and North America demand - Management noted that while North America has shown softer demand, international markets are driving growth, particularly in digital technologies [88][90] Question: Margin performance in transit and future expectations - Management indicated that transit margins are expected to remain strong, supported by favorable mix dynamics and ongoing integration efforts [134][140] Question: Services business seasonality and performance - Management discussed variations in services performance and indicated that the core services business remains stable despite fluctuations [141]

Core Insights - Westinghouse Air Brake Technologies (Wabtec) reported Q4 and full-year 2024 earnings that missed revenue and EPS estimates but showed solid margins and cash flows [2][3] Financial Performance - Adjusted EPS for Q4 2024 was $1.68, below the forecast of $1.73, while revenue was $2.58 billion, slightly under the anticipated $2.62 billion [2][4] - Year-over-year sales increased by 2.3%, with operating margin at 12.9%, up from 12.2% in Q4 2023 [4][7] - Cash flow from operations reached $723 million, a 5.4% increase from $686 million in Q4 2023 [4][9] Company Overview and Strategic Focus - Wabtec is a key player in the rail and transportation sectors, focusing on global expansion through strategic acquisitions and innovations in digital intelligence and green technologies [5][6] - The company emphasizes zero-emissions initiatives and automation to maintain its leadership in sustainable transportation solutions [5] Operational Highlights - The Freight segment reported net sales of $1.79 billion, while the Transit segment saw a 7.1% growth, generating $789 million in revenue [7] - The gross margin improved by 0.8 percentage points, reflecting operational efficiencies and effective pricing strategies [7] Innovation and Demand - Wabtec's innovation pipeline generated over $1 billion in new orders for locomotives and modifications, indicating strong demand for environmentally friendly technologies [8] - The backlog increased by 1.2% to $22.3 billion, showcasing sustained demand and a positive outlook [8] Shareholder Returns - The company returned $1.2 billion to shareholders through share repurchases and dividends, with a 25% increase in the quarterly dividend and a $1 billion share repurchase authorization [9] Future Outlook - Wabtec anticipates adjusted EPS for 2025 to be between $8.35 and $8.75, supported by mid-single-digit revenue growth and operational efficiencies [10]

Core Viewpoint - Westinghouse Air Brake Technologies (WAB) reported quarterly earnings of $1.68 per share, missing the Zacks Consensus Estimate of $1.73 per share, but showing an increase from $1.54 per share a year ago [1][2] Earnings Performance - The earnings surprise for the quarter was -2.89%, with a previous quarter's earnings of $2 per share exceeding expectations of $1.87 per share, resulting in a surprise of 6.95% [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times [2] Revenue Performance - Wabtec posted revenues of $2.58 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.38%, but showing an increase from $2.53 billion year-over-year [3] - The company has topped consensus revenue estimates three times over the last four quarters [3] Stock Performance - Wabtec shares have increased approximately 9.8% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [4] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $1.97 for the coming quarter and $8.59 for the current fiscal year [5][8] - The estimate revisions trend for Wabtec is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [7] Industry Context - The Transportation - Equipment and Leasing industry, to which Wabtec belongs, is currently in the top 27% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [9]

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, as amended, 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 intentions; Wabtec's expectations about future sales, earnings and ...

In a shareholder-friendly move, Wabtec Corporation’s (WAB) board of directors approved a dividend hike of 25%, thereby raising its quarterly cash dividend to 25 cents per share ($1.00 annualized) from 20 cents ($0.80 annualized). The raised dividend will be paid out on March 7, 2025, to shareholders of record at the close of business on Feb. 21. The move reflects WAB’s intention to utilize free cash to enhance its shareholders’ returns.Notably, Wabtec has been consistently making efforts to reward its share ...