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]

Financial Performance - Sales reached $2706 billion, a 23% year-over-year increase[7] - GAAP earnings per share increased by 195% year-over-year to $196, while adjusted EPS increased by 158% to $227[7] - Operating margin was 174%, benefiting from sales growth and improved gross margin[7] - Cash flow from operations was $209 million, driven by higher net income but tempered by higher working capital[7] Segment Performance - Freight segment sales decreased slightly by 01% to $1919 billion[26] - Transit segment sales increased by 87% to $787 million[26] - The company's 12-month backlog increased by 119% to $821 billion, providing strong visibility for 2025 and beyond[7] Strategic Initiatives - Acquisitions totaling approximately $850 million of expected annualized revenue are expected to be accretive[22] - First-year adjusted EBITDA margins from acquisitions are expected to be accretive at approximately 255%, with margin expansion expected from run-rate synergies of approximately $60 million[22] Updated Financial Guidance - The company updated its revenue guidance to $10725 billion to $11025 billion, including the Evident Inspection Technologies acquisition[48] - Adjusted diluted EPS guidance is $835 to $895, and cash conversion is expected to be greater than 90%[48]

[Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Rafael Santana highlighted strong Q2 2025 with **margin expansion**, **double-digit EPS growth**, and strategic M&A investments for shareholder value - CEO Rafael Santana noted a strong Q2 2025 with **margin expansion** and **double-digit EPS growth**[3](index=3&type=chunk) - The company committed **$3.5 billion** to M&A investments expected to create **immediate shareholder value**, with projected **accretive growth profiles**, **higher adjusted EBITDA margins**, **increased adjusted EPS** in the first year, and **improving ROIC**[4](index=4&type=chunk) - Despite an uncertain economic environment, Wabtec is committed to maintaining discipline and achieving its goals[5](index=5&type=chunk) [Key Financial & Operational Highlights](index=1&type=section&id=Key%20Financial%20%26%20Operational%20Highlights) Wabtec reported strong Q2 2025 results, with GAAP diluted EPS up **19.5%** and adjusted EPS up **15.8%**, achieving **margin expansion** and raising full-year guidance Q2 2025 Key Financial Highlights | Metric | 2Q'25 | Change YOY | | :--- | :--- | :--- | | Sales | $2.71B | +2.3% | | GAAP Diluted EPS | $1.96 | +19.5% | | Adjusted Diluted EPS | $2.27 | +15.8% | - GAAP Operating Margin at **17.4%**; Adjusted Operating Margin Up **1.8 pts** to **21.1%**[6](index=6&type=chunk) - Strong 12-month backlog growth of **11.9%**[6](index=6&type=chunk) - Returned **$94 million** to Shareholders via Dividends and Share Repurchases[6](index=6&type=chunk) - Raises 2025 Adjusted Diluted Earnings Per Share range to **$8.55 - $9.15**[6](index=6&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=2025%20Second%20Quarter%20Consolidated%20Results) [Q2 2025 Consolidated Performance](index=2&type=section&id=Q2%202025%20Consolidated%20Performance) Wabtec reported **2.3%** net sales increase to **$2,706 million** in Q2 2025, with **improved GAAP and Adjusted Gross/Operating Margins**, and **strong GAAP/Adjusted Diluted EPS growth** Q2 2025 Consolidated Financial Results | Metric | 2025 (Millions) | 2024 (Millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,706 | $2,644 | 2.3 % | | GAAP Gross Margin | 34.7 % | 33.0 % | 1.7 pts | | Adjusted Gross Margin | 34.8 % | 33.3 % | 1.5 pts | | GAAP Operating Margin | 17.4 % | 16.3 % | 1.1 pts | | Adjusted Operating Margin | 21.1 % | 19.3 % | 1.8 pts | | GAAP Diluted EPS | $1.96 | $1.64 | 19.5 % | | Adjusted Diluted EPS | $2.27 | $1.96 | 15.8 % | | Cash Flow from Operations | $209 | $235 | $(26) | - Sales increased **2.3%** compared to the year-ago quarter driven by higher sales in the Transit segment partially offset by lower Equipment sales. Freight revenue was adversely impacted by timing of locomotive shipments[9](index=9&type=chunk) - Both GAAP and adjusted operating margins benefited from higher sales and improved gross margins[9](index=9&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) [Freight Segment](index=2&type=section&id=2025%20Second%20Quarter%20Freight%20Segment%20Results) Freight segment net sales were flat at **$1,919 million** in Q2 2025, with services growth offset by lower locomotive deliveries, while **GAAP and Adjusted Operating Margins improved** Q2 2025 Freight Segment Financial Results | Metric | 2025 (Millions) | 2024 (Millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,919 | $1,920 | (0.1)% | | GAAP Gross Margin | 36.3 % | 34.8 % | 1.5 pts | | Adjusted Gross Margin | 36.4 % | 35.1 % | 1.3 pts | | GAAP Operating Margin | 21.6 % | 20.4 % | 1.2 pts | | Adjusted Operating Margin | 25.0 % | 24.1 % | 0.9 pts | - Services sales were up **6.0%** due to higher parts sales and modernization deliveries[10](index=10&type=chunk) - Lower locomotive deliveries in the quarter due to a supplied part issue and lower mining sales largely offset services growth; these deliveries are expected to shift to the 2nd half of 2025[10](index=10&type=chunk) [Transit Segment](index=3&type=section&id=2025%20Second%20Quarter%20Transit%20Segment%20Results) Transit segment net sales increased **8.7%** to **$787 million** in Q2 2025, driven by higher OE and aftermarket sales, **significantly improving GAAP and Adjusted Operating Margins** Q2 2025 Transit Segment Financial Results | Metric | 2025 (Millions) | 2024 (Millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $787 | $724 | 8.7 % | | GAAP Gross Margin | 30.7 % | 28.3 % | 2.4 pts | | Adjusted Gross Margin | 30.9 % | 28.6 % | 2.3 pts | | GAAP Operating Margin | 13.9 % | 11.3 % | 2.6 pts | | Adjusted Operating Margin | 15.2 % | 12.7 % | 2.5 pts | - Transit segment sales for the second quarter were up **8.7%** driven by higher OE and aftermarket sales[15](index=15&type=chunk) - GAAP and adjusted operating margins were up as a result of higher sales and improved gross margins[15](index=15&type=chunk) [Backlog](index=3&type=section&id=Backlog) [Backlog Overview](index=3&type=section&id=Backlog%20Overview) Wabtec's 12-month backlog grew **11.9%** to **$8,210 million** at June 30, 2025, providing **strong near-term revenue visibility**, despite a slight decrease in total multi-year backlog Consolidated Backlog Comparison (June 30) | Backlog | 2025 (Millions) | 2024 (Millions) | Change | | :--- | :--- | :--- | :--- | | 12-Month Backlog | $8,210 | $7,334 | 11.9 % | | Total Backlog | $21,828 | $22,075 | (1.1)% | - The 12-month backlog was **$876 million** higher than the prior year period[12](index=12&type=chunk) - The multi-year backlog was **$247 million** lower than the prior year period, and excluding foreign currency exchange, it was **$448 million** lower, down **2.0%**[12](index=12&type=chunk) [Cash Flow and Liquidity](index=3&type=section&id=Cash%20Flow%20and%20Liquidity%20Summary) [Cash Flow and Liquidity Summary](index=3&type=section&id=Cash%20Flow%20and%20Liquidity%20Summary%20Details) Q2 2025 cash from operations was **$209 million**, down due to higher working capital; the company maintained **$4.09 billion** in liquidity and returned **$94 million** to shareholders Q2 2025 Cash Flow and Liquidity | Metric | Amount (Millions) | | :--- | :--- | | Cash provided by operations (Q2) | $209 | | Cash, cash equivalents and restricted cash (period end) | $1,500 | | Total debt (period end) | $4,780 | | Total available liquidity | $4,090 | | Dividends paid (Q2) | $44 | | Shares repurchased (Q2) | $50 | - Cash provided by operations was **$209 million** versus **$235 million** in the year ago period partially due to higher working capital, affected by higher inventories due to the delay in Q2 locomotive deliveries and timing of customer deposits[16](index=16&type=chunk) - Total available liquidity was **$4.09 billion**, which includes cash and cash equivalents plus **$2.25 billion** available under current credit facilities and **$350 million** borrowings available under our Revolving Receivables Program[16](index=16&type=chunk) [2025 Financial Guidance](index=3&type=section&id=2025%20Financial%20Guidance) [Updated 2025 Guidance](index=3&type=section&id=Updated%202025%20Guidance) Wabtec raised 2025 revenue guidance to **$10.925B - $11.225B** and adjusted EPS to **$8.55 - $9.15**, driven by **strong performance** and M&A, with operating cash flow conversion expected over **90%** Updated 2025 Financial Guidance | Metric | New Guidance Range | | :--- | :--- | | Revenue | $10.925B - $11.225B (Up $200M at mid-point) | | Adjusted EPS | $8.55 - $9.15 (Up $0.20 at mid-point) | | Operating Cash Flow Conversion | > 90% | - Revenue guidance increase largely reflects the acquisition of Evident Inspection Technologies Division completed on July 1, 2025[16](index=16&type=chunk) - Adjusted EPS guidance increase is driven by first half performance, M&A, and focus on prudent cost management[6](index=6&type=chunk)[16](index=16&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) [About Wabtec](index=4&type=section&id=About%20Wabtec) Wabtec is a global leader in equipment, systems, and digital solutions for freight and transit rail, mining, marine, and industrial markets, committed to **sustainable rail worldwide** - Wabtec Corporation is a leading global provider of equipment, systems, digital solutions and value-added services for the freight and transit rail industries, as well as the mining, marine and industrial markets[22](index=22&type=chunk) - Wabtec has been a leader in the rail industry for over **155 years** and has a vision to achieve a sustainable rail system in the U.S. and worldwide[22](index=22&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Wabtec hosted a conference call for analysts and investors on July 24, 2025, with a webcast and audio replay available on its investor relations website - Wabtec hosted a call with analysts and investors at **8:30 a.m. ET**, today (July 24, 2025)[24](index=24&type=chunk) - To listen via webcast, go to Wabtec's website at www.WabtecCorp.com and click on 'Events & Presentations' in the 'Investor Relations' section. An audio replay is also available[24](index=24&type=chunk) [Non-GAAP Financial Measures & Forward-Looking Statements](index=6&type=section&id=Information%20about%20non-GAAP%20Financial%20Information%20and%20Forward-Looking%20Statements) [Non-GAAP Financial Information](index=6&type=section&id=Non-GAAP%20Financial%20Information) Wabtec's earnings release includes non-GAAP measures like adjusted gross profit, operating margin, and EPS, which are **supplemental to GAAP** and **reconciled for clarity** - Wabtec's earnings release mentions non-GAAP financial performance measures including adjusted gross profit, adjusted operating margin, adjusted EPS, EBITDA, and operating cash flow conversion[25](index=25&type=chunk) - These non-GAAP measures are useful supplemental measures but are not presented in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP results[25](index=25&type=chunk) - Wabtec is not presenting a quantitative reconciliation of forecasted GAAP earnings per diluted share to forecasted adjusted earnings per diluted share due to unreasonable efforts exemption, as the impact and timing of certain charges are uncertain[23](index=23&type=chunk) [Forward-Looking Statements Disclaimer](index=6&type=section&id=Forward-Looking%20Statements) Forward-looking statements are subject to risks including economic conditions, acquisitions, regulatory changes, and cybersecurity, which may cause **actual results to differ materially** - Forward-looking statements concern future circumstances and results, including expectations about future sales, earnings, cash conversion, market conditions, and benefits from acquisitions[26](index=26&type=chunk) - Important factors that could cause actual results to differ materially include changes in economic/industry conditions, customer financial condition, unexpected costs from acquisitions, inability to retain key personnel, evolving legal/regulatory regimes, changes in project timing, decrease in freight/passenger rail traffic, increase in manufacturing costs, actions by third parties, impacts of public health crises, global military action, and cybersecurity risks[26](index=26&type=chunk) - Wabtec does not undertake any obligation to update any forward-looking statements, except as required by law[27](index=27&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=WESTINGHOUSE%20AIR%20BRAKE%20TECHNOLOGIES%20CORPORATION%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) [Statements of Income](index=8&type=section&id=Statements%20of%20Income) Wabtec's Q2 2025 net sales increased to **$2,706 million**, with gross profit rising to **$938 million** (**34.7%** of sales) and diluted EPS reaching **$1.96** Condensed Consolidated Statements of Income (Q2 2025 vs 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | | :--- | :--- | :--- | | Net sales | $2,706 | $2,644 | | Gross profit | $938 | $874 | | Gross profit as a % of Net sales | 34.7 % | 33.0 % | | Income from operations | $472 | $430 | | Income from operations as a % of Net sales | 17.4 % | 16.3 % | | Net income attributable to Wabtec shareholders | $336 | $289 | | Diluted EPS | $1.96 | $1.64 | Condensed Consolidated Statements of Income (YTD June 30, 2025 vs 2024) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | | :--- | :--- | :--- | | Net sales | $5,316 | $5,141 | | Gross profit | $1,838 | $1,689 | | Gross profit as a % of Net sales | 34.6 % | 32.8 % | | Income from operations | $946 | $842 | | Income from operations as a % of Net sales | 17.8 % | 16.4 % | | Net income attributable to Wabtec shareholders | $658 | $561 | | Diluted EPS | $3.84 | $3.17 | Segment Information (Q2 2025 vs 2024) | Segment | Net Sales (2025) | Net Sales (2024) | Operating Margin (2025) | Operating Margin (2024) | | :--- | :--- | :--- | :--- | :--- | | Freight | $1,919 | $1,920 | 21.6 % | 20.4 % | | Transit | $787 | $724 | 13.9 % | 11.3 % | [Balance Sheets](index=10&type=section&id=Balance%20Sheets) As of June 30, 2025, total assets increased to **$20,391 million** due to higher cash and receivables, while total liabilities rose to **$9,546 million** from increased long-term debt Condensed Consolidated Balance Sheets (June 30, 2025 vs Dec 31, 2024) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $1,499 | $715 | | Total current assets | $6,354 | $4,943 | | Total Assets | $20,391 | $18,702 | | Current liabilities | $3,606 | $3,792 | | Long-term debt | $4,784 | $3,480 | | Total Liabilities | $9,546 | $8,569 | | Shareholders' equity | $10,801 | $10,091 | | Total Liabilities and Equity | $20,391 | $18,702 | [Statements of Cash Flows](index=11&type=section&id=Statements%20of%20Cash%20Flows) YTD Q2 2025 net cash from operations was **$400 million**, down due to working capital; net cash from financing was **$454 million**, significantly increasing cash and equivalents Condensed Consolidated Statements of Cash Flows (YTD June 30, 2025 vs 2024) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | | :--- | :--- | :--- | | 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) | | Cash, cash equivalents and restricted cash, end of period | $1,499 | $595 | - The decrease in net cash provided by operating activities was influenced by higher receivables and inventories[35](index=35&type=chunk) [Non-GAAP Reconciliations & Supplemental Data](index=12&type=section&id=Non-GAAP%20Reconciliations%20%26%20Supplemental%20Data) [Reconciliation of Reported to Adjusted Results (Consolidated)](index=12&type=section&id=Reconciliation%20of%20Reported%20Results%20to%20Adjusted%20Results) This section reconciles Wabtec's GAAP to non-GAAP adjusted results for various periods, adjusting for restructuring, transaction costs, and non-cash amortization to show **underlying operational performance** [Q2 & YTD 2025](index=12&type=section&id=Second%20Quarter%202025%20Actual%20Results) Q2 2025 Reconciliation to Adjusted Results | Metric | Reported (Millions) | Adjustments (Millions) | Adjusted (Millions) | | :--- | :--- | :--- | :--- | | Net Sales | $2,706 | — | $2,706 | | Gross Profit | $938 | $3 | $941 | | Operating Expenses | $(466) | $97 | $(369) | | Income from Operations | $472 | $100 | $572 | | Wabtec Net Income | $336 | $53 | $389 | | EPS | $1.96 | $0.31 | $2.27 | YTD 2025 Reconciliation to Adjusted Results | Metric | Reported (Millions) | Adjustments (Millions) | Adjusted (Millions) | | :--- | :--- | :--- | :--- | | Net Sales | $5,316 | — | $5,316 | | Gross Profit | $1,838 | $6 | $1,844 | | Operating Expenses | $(892) | $185 | $(707) | | Income from Operations | $946 | $191 | $1,137 | | Wabtec Net Income | $658 | $118 | $781 | | EPS | $3.84 | $0.71 | $4.55 | [Q2 & YTD 2024](index=13&type=section&id=Second%20Quarter%202024%20Actual%20Results) Q2 2024 Reconciliation to Adjusted Results | Metric | Reported (Millions) | Adjustments (Millions) | Adjusted (Millions) | | :--- | :--- | :--- | :--- | | Net Sales | $2,644 | — | $2,644 | | Gross Profit | $874 | $6 | $880 | | Operating Expenses | $(444) | $74 | $(370) | | Income from Operations | $430 | $80 | $510 | | Wabtec Net Income | $289 | $57 | $346 | | EPS | $1.64 | $0.32 | $1.96 | YTD 2024 Reconciliation to Adjusted Results | Metric | Reported (Millions) | Adjustments (Millions) | Adjusted (Millions) | | :--- | :--- | :--- | :--- | | Net Sales | $5,141 | — | $5,141 | | Gross Profit | $1,689 | $12 | $1,701 | | Operating Expenses | $(847) | $151 | $(696) | | Income from Operations | $842 | $163 | $1,005 | | Wabtec Net Income | $561 | $121 | $682 | | EPS | $3.17 | $0.68 | $3.85 | [FY 2024 & FY 2023](index=14&type=section&id=Fourth%20Quarter%20Year-to-Date%202024%20Actual%20Results) FY 2024 Reconciliation to Adjusted Results | Metric | Reported (Millions) | Adjustments (Millions) | Adjusted (Millions) | | :--- | :--- | :--- | :--- | | Net Sales | $10,387 | — | $10,387 | | Gross Profit | $3,366 | $37 | $3,403 | | Operating Expenses | $(1,757) | $321 | $(1,436) | | Income from Operations | $1,609 | $358 | $1,967 | | Wabtec Net Income | $1,056 | $268 | $1,324 | | EPS | $6.04 | $1.52 | $7.56 | FY 2023 Reconciliation to Adjusted Results | Metric | Reported (Millions) | Adjustments (Millions) | Adjusted (Millions) | | :--- | :--- | :--- | :--- | | Net Sales | $9,677 | — | $9,677 | | Gross Profit | $2,944 | $38 | $2,982 | | Operating Expenses | $(1,678) | $339 | $(1,339) | | Income from Operations | $1,266 | $377 | $1,643 | | Wabtec Net Income | $815 | $251 | $1,066 | | EPS | $4.53 | $1.39 | $5.92 | [EBITDA Reconciliation](index=15&type=section&id=EBITDA%20Reconciliation) Wabtec provides EBITDA and Adjusted EBITDA reconciliations, with Q2 2025 reported EBITDA at **$611 million** and Adjusted EBITDA at **$608 million**, adjusting for restructuring and transaction costs Q2 2025 EBITDA Reconciliation | Metric | Reported Income from Operations | Other Income (Expense) | Depreciation & Amortization | EBITDA | Restructuring & Transaction Costs | Adjusted EBITDA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Results | $472 | $24 | $115 | $611 | $(3) | $608 | YTD 2025 EBITDA Reconciliation | Metric | Reported Income from Operations | Other Income (Expense) | Depreciation & Amortization | EBITDA | Restructuring & Transaction Costs | Adjusted EBITDA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Results | $946 | $22 | $234 | $1,202 | $14 | $1,216 | Q2 2024 EBITDA Reconciliation | Metric | Reported Income from Operations | Other Income (Expense) | Depreciation & Amortization | EBITDA | Restructuring Costs | Adjusted EBITDA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Consolidated Results | $430 | $4 | $116 | $550 | $5 | $555 | [Sales by Product Line](index=16&type=section&id=SALES%20BY%20PRODUCT%20LINE) Wabtec's Q2 2025 Freight segment sales were **$1,919 million**, led by Services, while Transit segment sales increased to **$787 million** from OE and Aftermarket growth Q2 2025 Sales by Product Line (Millions) | Segment | Product Line | 2025 | 2024 | | :--- | :--- | :--- | :--- | | Freight | Services | $781 | $737 | | | Equipment | $546 | $570 | | | Components | $401 | $414 | | | Digital Intelligence | $191 | $199 | | | **Total Freight Segment** | **$1,919** | **$1,920** | | Transit | Original Equipment Manufacturer | $353 | $310 | | | Aftermarket | $434 | $414 | | | **Total Transit Segment** | **$787** | **$724** | YTD 2025 Sales by Product Line (Millions) | Segment | Product Line | 2025 | 2024 | | :--- | :--- | :--- | :--- | | Freight | Services | $1,644 | $1,475 | | | Equipment | $1,022 | $1,096 | | | Components | $782 | $798 | | | Digital Intelligence | $372 | $375 | | | **Total Freight Segment** | **$3,820** | **$3,744** | | Transit | Original Equipment Manufacturer | $675 | $620 | | | Aftermarket | $821 | $777 | | | **Total Transit Segment** | **$1,496** | **$1,397** | [Reconciliation of Reported to Adjusted Results - By Segment](index=17&type=section&id=RECONCILIATION%20OF%20REPORTED%20RESULTS%20TO%20ADJUSTED%20RESULTS%20-%20BY%20SEGMENT) Segment-level reconciliations show Q2 2025 Freight adjusted operating margin at **25.0%** and Transit at **15.2%**, after adjusting for restructuring and transaction costs Q2 2025 Freight Segment Adjusted Results (Millions) | Metric | Reported Gross Profit | Adjusted Gross Profit | Reported Income from Operations | Adjusted Income from Operations | | :--- | :--- | :--- | :--- | :--- | | Freight Segment | $697 | $699 | $415 | $480 | | Freight Segment Margin | 36.3 % | 36.4 % | 21.6 % | 25.0 % | Q2 2025 Transit Segment Adjusted Results (Millions) | Metric | Reported Gross Profit | Adjusted Gross Profit | Reported Income from Operations | Adjusted Income from Operations | | :--- | :--- | :--- | :--- | :--- | | Transit Segment | $241 | $242 | $109 | $120 | | Transit Segment Margin | 30.7 % | 30.9 % | 13.9 % | 15.2 % | - Adjustments for Freight segment include restructuring and portfolio optimization costs, transaction costs, and non-cash amortization expense[49](index=49&type=chunk) [Reconciliation of Changes in Net Sales - By Segment](index=18&type=section&id=RECONCILIATION%20OF%20CHANGES%20IN%20NET%20SALES%20-%20BY%20SEGMENT) Q2 2025 consolidated net sales increased by **$62 million** (**2.3%**), driven by acquisitions, foreign exchange, and organic growth, with Transit growing and Freight remaining flat Q2 2025 Net Sales Change Reconciliation (Millions) | Factor | Freight | Transit | Consolidated | | :--- | :--- | :--- | :--- | | 2024 Net sales | $1,920 | $724 | $2,644 | | Acquisitions | $18 | $9 | $27 | | Foreign Exchange | $(11) | $22 | $11 | | Organic | $(8) | $32 | $24 | | 2025 Net sales | $1,919 | $787 | $2,706 | | Change ($) | $(1) | $63 | $62 | | Change (%) | (0.1)% | 8.7 % | 2.3 % | YTD 2025 Net Sales Change Reconciliation (Millions) | Factor | Freight | Transit | Consolidated | | :--- | :--- | :--- | :--- | | 2024 Net sales | $3,744 | $1,397 | $5,141 | | Acquisitions | $33 | $17 | $50 | | Foreign Exchange | $(37) | $5 | $(32) | | Organic | $80 | $77 | $157 | | 2025 Net sales | $3,820 | $1,496 | $5,316 | | Change ($) | $76 | $99 | $175 | | Change (%) | 2.0 % | 7.1 % | 3.4 % | [Cash Conversion Calculation](index=19&type=section&id=Cash%20Conversion%20Calculation) Wabtec's Q2 2025 operating cash flow conversion was **46%** (**$209 million** cash from operations / net income + D&A), a **decrease from the prior year** Q2 2025 Cash Conversion Calculation (Millions) | Metric | Value | | :--- | :--- | | Reported Cash from Operations | $209 | | Net Income | $339 | | Depreciation & Amortization | $117 | | Cash Conversion | 46% | YTD 2025 Cash Conversion Calculation (Millions) | Metric | Value | | :--- | :--- | | Reported Cash from Operations | $400 | | Net Income | $666 | | Depreciation & Amortization | $237 | | Cash Conversion | 44% | Q2 2024 Cash Conversion Calculation (Millions) | Metric | Value | | :--- | :--- | | Reported Cash from Operations | $235 | | Net Income | $291 | | Depreciation & Amortization | $118 | | Cash Conversion | 57% |

Core Insights - Wabtec Corporation (WAB) is set to report its second-quarter 2025 results on July 24, with a history of positive earnings surprises, having outperformed the Zacks Consensus Estimate in three of the last four quarters, averaging a beat of 5.86% [1][4]. Earnings Performance - The Zacks Consensus Estimate for WAB's Q2 2025 earnings is $2.18 per share, reflecting a 0.46% upward revision in the past 60 days and an 11.22% increase from the previous year's actual [4][5]. - WAB's Q1 2025 earnings per share were reported at $2.28, exceeding the Zacks Consensus Estimate of $2.01, marking a 20.6% year-over-year improvement [10]. Revenue Estimates - The Zacks Consensus Estimate for WAB's Q2 2025 revenues is $2.77 billion, indicating a 4.84% growth from the previous year [5]. - Q2 2025 Freight revenues are estimated at $2.01 billion, representing a 4.6% increase year-over-year, while Transit revenues are pegged at $763 million, indicating a 5.4% growth [6][7]. Influencing Factors - The anticipated earnings performance is supported by higher sales and operating margin expansion, although supply chain issues, economic and political uncertainties, and high costs may pressure margins and revenues [4][8]. - Wabtec's operations outside the U.S. expose it to foreign currency exchange rate fluctuations, which is a significant concern for its financials [8]. Earnings Prediction Model - The current model predicts a potential earnings beat for Wabtec, supported by a positive Earnings ESP of +0.50% and a Zacks Rank of 2 (Buy) [9].

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].

Core Insights - All three major U.S. stock indices rose on July 17, 2025, driven by positive retail sales data and a decline in unemployment claims [1][2][11] - Better-than-expected earnings from major tech companies like Netflix contributed to investor confidence [2] - The current market environment suggests a favorable outlook for investing in U.S. stocks, particularly in low-leverage companies [3] Economic Indicators - U.S. retail sales increased by 0.6% in June 2025, following a 0.9% decline in May, exceeding market expectations [1][11] - Labor data indicated a decline in unemployment claims, further supporting market optimism [1] Investment Recommendations - Recommended stocks include Novartis (NVS), ResMed Inc. (RMD), Wabtec (WAB), Elbit Systems (ESLT), and Ingredion Inc. (INGR), all of which are characterized by low leverage and strong earnings growth [3][11] - Each of these stocks holds a Zacks Rank 2, indicating a favorable investment outlook [11] Stock Analysis - Novartis reported a 12% year-over-year increase in net sales and a 29% improvement in earnings per share for Q2 2025 [15][16] - ResMed anticipates an 8.1% year-over-year increase in fiscal fourth-quarter sales, with a long-term earnings growth rate of 15.3% [17][18] - Wabtec's sales are expected to grow by 5.3% year-over-year, supported by a long-term earnings growth rate of 16% [19][20] - Elbit Systems forecasts a 13.8% increase in 2025 sales, with a four-quarter average earnings surprise of 21.12% [21] - Ingredion expects a 1% improvement in 2025 sales, with a long-term earnings growth rate of 11% [22][23]

Group 1 - The individual has retired after over 43 years in investment research, now operating independently to provide actionable investment insights [1] - The focus is on rules and factor-based equity investing strategies, emphasizing the use of numbers to inspire human intelligence-driven investment stories rather than serving the numbers themselves [1] - The approach combines quantitative analysis with classic fundamental analysis to uncover the true story of a company and its stock, highlighting the importance of future potential over past data [1] Group 2 - The individual has extensive experience covering a wide range of stocks, including large cap, small cap, micro cap, value, growth, and special situations [1] - Previous roles included managing a high-yield fixed-income fund and conducting research on quantitative asset allocation strategies, contributing to the development of Robo Advising [1] - A passion for investor education has led to conducting numerous seminars and authoring two books on stock selection and analysis [1]

Core Insights - Wabtec Corporation is enhancing its operations through the strategic acquisition of Frauscher Sensor Technology Group for an enterprise value of €675 million, subject to customary closing conditions and regulatory approvals [1][2] Financial Metrics - The acquisition price represents an estimated multiple of 12.4x projected 2025 EBITDA, adjusted for expected run-rate cost synergies over the next three years [2] - Frauscher is projected to generate nearly €145 million in revenues in 2025, with growth expected to exceed Wabtec's average growth over the next five years [2] Business Integration - Frauscher is a global leader in train detection, wayside object control solutions, and axle counting systems, and will be integrated into Wabtec's Digital Intelligence business upon completion [3] - The acquisition is anticipated to generate immediate shareholder value, with accretive growth profile, adjusted earnings before interest and taxes margins, and return on invested capital over time [5][10] Strategic Benefits - The deal expands Wabtec's Digital Intelligence portfolio and enhances business opportunities in the high-growth railway signaling market [6][10] - The acquisition aligns with Wabtec's long-term growth strategy and strengthens its presence in Europe and India, supporting its global rail signaling growth strategy [4][7][10] Market Performance - Wabtec shares have gained 12.4% year-to-date, outperforming the Zacks Transportation - Equipment and Leasing industry and the S&P 500 [8]