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]

Core Insights - Wabtec Corporation has completed the acquisition of Evident's Inspection Technologies division for $1.78 billion, enhancing its Digital Intelligence business and expanding its market reach [1][10]. Financial Details - The acquisition was financed through cash on hand, newly issued term notes, term loans, and short-term borrowing [2]. - The purchase price represents an estimated multiple of 12.0x projected 2025 EBITDA, adjusted for transaction costs, anticipated tax benefits, and projected cost synergies of $25 million [3]. Strategic Impact - The acquisition is expected to generate immediate shareholder value with a high single-digit revenue growth outlook and accretive adjusted earnings before interest and taxes margins [5]. - Wabtec's total addressable market is expected to double from nearly $8 billion to $16 billion, significantly enhancing growth opportunities [6]. Operational Enhancements - The deal strengthens Wabtec's product portfolio by integrating advanced automated inspection capabilities, enhancing predictive maintenance capabilities through advanced analytics, sensors, and AI technology [7]. - The acquisition aligns with Wabtec's long-term vision to lead in innovation within the rail, mining, and industrial sectors [4]. Market Performance - Wabtec currently holds a Zacks Rank 2 (Buy) and has seen its shares gain 10.4% year-to-date, outperforming the Zacks Transportation - Equipment and Leasing industry and the S&P 500 [8].