Westinghouse Air Brake Technologies(WAB) - 2025 Q2 - Quarterly Report

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 This item presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements Condensed Consolidated Balance Sheets 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 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 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 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] - 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] - 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][47][48] - 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] - 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] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an analysis of the company's financial performance, liquidity, and capital resources, highlighting key drivers and strategic initiatives Results of Operations 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] - Q2 2025 SG&A expenses included $25 million in transaction costs related to announced acquisitions[133] Liquidity and Capital Resources 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] - 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][197] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] Item 4. Controls and Procedures 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] - 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] 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 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] - 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][103][104] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 |