Westinghouse Air Brake Technologies Corporation
WAB · NYSE
Next quarter
Reports Oct 28, 2026.
Consensus is $2.69 EPS for Sep 2026 across 3 estimates, ranging $2.65 to $2.76.
WAB Jun 2026
- 4.94%
- +2.76%
- $2.63
- $2.76
- —
- $3.18B
Reported results
- $3.18B
- 36.52%
- $600.00M
- 18.87%
- $395.00M
- $2.33
Highlights
- Adjusted EPS: Adjusted diluted EPS was $2.76, up 21.6% year over year and $0.13, or 4.9%, above the $2.63 consensus; GAAP diluted EPS was $2.33, up 18.9%.
- Revenue: Sales rose 17.5% year over year to $3.18 billion, including $229 million of organic growth, $232 million from acquisitions and $24 million from foreign exchange.
- Margin expansion: GAAP operating margin increased 1.5 points to 18.9%, while adjusted operating margin rose 0.8 points to 21.9%, reflecting stronger gross margins, productivity and acquisition accretion.
- Freight: Freight sales increased 16.9% to $2.24 billion, with equipment sales up 35.0% and Digital Intelligence sales up 88.5%; operating margin expanded 0.9 points to 22.5%.
- Transit: Transit sales grew 18.9% to $936 million, including 17.7% growth on a constant-currency basis; operating margin improved 1.7 points to 15.6%.
- Backlog: Total backlog reached a record $30.93 billion, up 41.7% year over year, while the 12-month backlog grew 11.3% to $9.14 billion.
- Guidance: Wabtec raised 2026 revenue guidance to $12.30-$12.60 billion and adjusted EPS guidance to $10.60-$10.90, lifting the respective midpoints by $110 million and $0.30.
- Cash and capital: Operating cash flow increased to $441 million from $209 million, or 82% conversion versus 46%; the company repurchased $215 million of shares and paid $53 million in dividends.
Analysis
Wabtec's second quarter was a broad-based execution beat, led by organic growth, better margins and contributions from recent acquisitions. Adjusted EPS of $2.76 exceeded the $2.63 consensus by 4.9% and rose 21.6% from $2.27 a year ago. GAAP EPS was $2.33 versus $1.96, while revenue of $3.18 billion increased 17.5% from $2.71 billion in the year-ago quarter. Sequentially, revenue rose 7.8% from $2.95 billion, operating income increased 16.1% to $600 million and net income attributable to Wabtec shareholders rose 9.1% to $395 million from $362 million.
The key feature of the print was profitable growth across both segments. Freight benefited from locomotive deliveries, mining and acquired digital businesses, while Transit combined Dellner Couplers with stronger aftermarket and original-equipment demand. Gross margin expanded 1.8 points to 36.5%, more than offsetting higher acquisition-related operating expenses and interest costs. Backlog rose to $30.93 billion, providing substantial forward visibility, and management raised full-year guidance. Cash generation improved sharply, although debt stood at $6.57 billion after acquisition funding and available liquidity declined to $2.02 billion from $3.21 billion at year-end.
Revenue and margins
The quarter combined strong volume with improved conversion. Consolidated sales increased $473 million year over year, with organic growth contributing $229 million, acquisitions $232 million and foreign exchange $24 million. Gross margin expanded to 36.5% from 34.7%, driven by productivity, efficiency, restructuring savings and acquisition accretion, partly offset by tariffs and Freight mix. Operating income rose to $600 million from $472 million, even as operating expenses increased 20.4% to $561 million.
- GAAP profitability: GAAP operating margin was 18.9%, up 1.5 points year over year; net income attributable to Wabtec shareholders was $395 million versus $336 million.
- Adjusted profitability: Adjusted operating margin was 21.9%, up 0.8 points, and adjusted EPS increased to $2.76 from $2.27.
- Below operating income: Net interest expense increased to $80 million from $46 million because of higher acquisition-related debt, while other income fell to a $2 million expense from $24 million of income after the prior-year derivative gain did not recur.
Freight performance
Freight remained the larger growth engine, with sales up 16.9% to $2.24 billion and operating income up 21.4% to $504 million. The segment's organic increase was $158 million, led by higher North American and international locomotive deliveries and mining sales. Lower modernization deliveries reduced Services revenue, but this was more than offset by equipment and digital growth.
- Product mix: Equipment sales increased 35.0% to $737 million, while Services declined 4.2% to $748 million as modernization deliveries fell.
- Digital expansion: Digital Intelligence sales climbed 88.5% to $360 million, primarily reflecting the Inspection Technologies and Frauscher acquisitions.
- Margin: GAAP operating margin increased to 22.5% from 21.6%; the gain came from gross-margin improvement, partly offset by higher operating expenses as a percentage of sales.
Transit performance
Transit delivered the faster segment growth, supported by the Dellner Couplers acquisition and healthy demand in both original equipment and aftermarket. Revenue increased 18.9% to $936 million, or 17.7% on a constant-currency basis, while operating income rose 33.9% to $146 million.
- Demand: Organic sales increased $71 million, or 9.0%, with aftermarket up $56 million and original-equipment sales up $15 million.
- Acquisition contribution: Dellner added $69 million of quarterly sales; foreign exchange contributed another $10 million.
- Margin: GAAP operating margin improved to 15.6% from 13.9%, as productivity, favorable mix and restructuring savings lifted gross margin by 2.1 points to 32.8%.
Backlog and guidance
The order book strengthened materially and underpins management's higher outlook. Total backlog increased $9.10 billion year over year to $30.93 billion, with Freight accounting for $25.33 billion and Transit $5.60 billion. The increase included major mining, locomotive, modernization, Positive Train Control and Australian awards during the first half.
- Near-term visibility: The 12-month backlog was $9.14 billion, up 11.3% year over year, although modestly below the $9.25 billion level at March 31.
- Full-year revenue: 2026 revenue guidance was raised to $12.30-$12.60 billion, a midpoint of $12.45 billion and $110 million above the prior midpoint, implying 11.5% growth from 2025.
- Full-year earnings: Adjusted EPS guidance increased to $10.60-$10.90, with a $10.75 midpoint, $0.30 above the prior midpoint and implying 19.9% year-over-year growth.
Cash and capital
Cash generation improved substantially, but acquisition spending and financing remain important parts of the capital picture. Operating cash flow was $441 million in the quarter versus $209 million a year ago, helped by higher earnings and favorable working capital. For the first half, operating cash flow was $640 million versus $400 million, while acquisitions consumed $1.06 billion.
- Liquidity: Cash, cash equivalents and restricted cash totaled $670 million, total debt was $6.57 billion and available liquidity was $2.02 billion, including $1.36 billion under credit facilities.
- Shareholder returns: Wabtec repurchased $215 million of stock and paid $53 million in dividends during the quarter; $760 million remained under the repurchase authorization at June 30.
- Balance-sheet effect: First-half net debt funding contributed $1.05 billion of financing inflows, while higher debt increased quarterly interest expense by $34 million year over year.
