What changed in this filing

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Item 1. Business

2023-02-15 compared with 2022-02-17 · 140 added, 149 removed, 371 unchanged (44% of the section changed)

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This brought a global technology leader and supplier of locomotives, equipment, services and digital solutions to the rail, mining, marine, stationary power and drilling industries into Wabtec.

As a result of those strategic acquisitions, as well as other smaller acquisitions and organic growth, Wabtec is now one of the world’s largest providers of locomotives, value-added, technology-based equipment, systems and services for the global freight rail and passenger transit industries with approximately 25,000 employees, excluding contingent workers, and operations in over 50 countries.

We believe we hold a leading market share for many of our core product lines globally.

As a result of those strategic acquisitions, as well as other smaller acquisitions and organic growth, Wabtec is now one of the world’s largest providers of value-added, technology-based locomotives, equipment, systems and services for the global freight rail and passenger transit industries, and also serves customers in the mining, marine, and industrial markets.

Wabtec has approximately 27,000 employees, excluding contingent workers, and operations in over 50 countries.

We hold a leading market share for many of our core product lines globally.

Our highly engineered products, which are intended to enhance safety, improve productivity and reduce maintenance costs for customers, can be found on most locomotives, freight cars, passenger transit cars and buses around the world.

Through both internal growth as well as acquisitions, Wabtec has positioned itself with the following strategic benefits:

• Increased diversity of revenues by product, geography and market.

Comprehensive product offerings spanning the freight rail and passenger transit industries, as well as products in the bus, mining and marine, and discrete industrial markets help Wabtec to balance the cyclical nature of the global rail business.

Through both internal growth as well as acquisitions, Wabtec has positioned itself with the following strategic strengths:

• Diversity of revenues by product, geography and market.

Comprehensive product and service offerings spanning the freight rail and passenger transit industries, as well as products in the bus, mining, marine, and discrete industrial markets help Wabtec to balance the cyclical nature of the global rail business.

• Significant operating synergies and improved financial profile .

The consummation of the GE Transportation acquisition is leading to operating synergies across all of Wabtec.

As a result, we achieved over $250 million in annual run-rate operating synergies, driven by cost and revenue opportunities.

This will enhance Wabtec’s margins and revenue growth opportunities with strong free cash flow generation to enable strategic deleveraging through debt reduction and earnings growth.

• Increased technical and engineering expertise.

Particularly with the onboarding of Faiveley Transport and GE Transportation, Wabtec's technical capabilities and product development efforts are strengthened.

• Increased scale and diversification of Wabtec’s Freight product portfolio .

Wabtec is one of the world’s largest providers of locomotives, freight car components, technology-enabled equipment, systems and services for the locomotive and freight rail industries.

• Broadened product line and international presence in the transit market.

Wabtec offers a comprehensive, broad and diversified portfolio of products to the transit rail industries throughout the world.

The acquisition and integration of GE Transportation has led to operating synergies across all of Wabtec.

Wabtec continues to focus on realizing operating synergies from smaller strategic bolt-on acquisitions as well as driving operational efficiencies through the previously announced Integration 2.0 initiative, a three-year strategic initiative that targets operational synergies and supports Wabtec's margin improvement through productivity gains.

Wabtec is also focused on earnings growth through expanding high-margin recurring revenue streams.

• Exceptional technical and engineering expertise.

Wabtec's engineers and technical capabilities support continued focus on innovative product development and efforts to achieve scalable technologies.

Our technology expertise and investment in technology is key for Wabtec leading the decarbonization of the rail industry.

• Scale of Wabtec’s operations .

Wabtec is one of the world’s largest providers of technology-enabled locomotives and equipment, freight car components, systems, and services for the freight rail and passenger transit industries.

The size of Wabtec's operations enables the Company to achieve economies of scale, in addition to using best-cost locations for executing on operational decisions.

• Complementary Digital and Electronics technologies .

Wabtec has a comprehensive digital portfolio and leading engineering and technical intellectual property, which provides electronics and digital technologies to meet growing demand for train intelligence and network optimization.

Wabtec has a comprehensive digital and electronics portfolio and leading engineering and technical intellectual property, which provides electronics and digital technologies to meet growing demand for train intelligence and network optimization.

• Enhanced Aftermarket and Services opportunities .

Wabtec has an installed base of more than 23,000 locomotives and content on virtually all North American locomotives and freight cars, as well as a diverse offering of Transit locomotives and cars both internationally and domestically, which enables significant opportunities in the higher-margin aftermarket parts and services business and mitigates the exposure to cycles.

Wabtec has an installed base of more than 23,000 locomotives and content on virtually all North American locomotives and freight cars, as well as a diverse offering of Transit

locomotives and cars both internationally and domestically, which enables significant opportunities in the higher-margin aftermarket parts and services business and mitigates the exposure to cycles.

Industry Overview

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Many factors influence these industries, including general economic conditions;

traffic volumes, as measured by freight carloadings and passenger ridership;

traffic volumes, as measured by freight carloads and passenger ridership;

government spending on public transportation;

and investment in new technologies.

In general, trends such as increasing urbanization and growth in developing markets, a focus on sustainability and environmental awareness, increasing investment in technology solutions, an aging equipment fleet, and growth in global trade are expected to drive continued investment in freight rail and passenger transit.

In general, trends such as urbanization and growth in developing markets, sustainability and environmental awareness, investment in technology solutions, an aging equipment fleet, and growth in global trade are expected to drive continued investment in freight rail and passenger transit.

The Association of the European Rail Industry, UNIFE, advocates for and represents European train builders and rail suppliers.

UNIFE publishes a biennial market study that provides an overview of the market in its current form and a forecast of its future development in different regions and market segments.

According to the 2020 biennial edition of the study, the accessible global market for railway products and services is more than $120 billion and is expected to grow in the medium- and long-term at an average annual growth rate of 2.3% through 2025, despite an 8% COVID-induced decline in 2020.

The 2020 study also concluded that the rail sector had grown 3.6% annually since 2017, supporting the appeal of rail transport for all sectors from urban metro to commercial freight.

The three largest geographic markets, which represented about 85% of the total accessible market, were Europe, North America and Asia Pacific, all of which are projected to continue to grow.

In Europe, only 19% of freight traffic is rail while the majority of the rail system serves the passenger transit market, which is expected to continue growing as energy and environmental policies encourage continued investment in public mass transit, and modal shift from car to rail, although this growth may be stunted in the near-term as a result of the COVID-19 pandemic.

In North America, railroads carry about 40% of intercity freight, as measured by ton-miles, which is more than any other mode of transportation.

North America’s rail network is regarded as the world’s most-efficient and lowest-cost freight rail service.

There are more than 600 railroads operating in North America, with the largest railroads, referred to as “Class I”, accounting for more than 90% of the industry’s revenues.

Growth in the Asia Pacific market has been driven mainly by the continued urbanization of China and India, and by continued investments in freight rail rolling stock and infrastructure in Australia to serve its mining and natural resources markets.

India is making significant investments in rolling stock and infrastructure to modernize its rail system

According to UNIFE, most emerging markets, including Russia-CIS (Commonwealth of Independent States) and Africa-Middle East, are expected to grow at above-average rates as global trade leads to increased freight volumes and urbanization leads to increased demand for efficient mass-transportation systems.

With about 1.3 million freight cars and about 21,000 locomotives, Russia-CIS is among the largest freight rail markets in the world.

The COVID-19 pandemic has impacted the expected growth in these emerging markets.

As growth occurs, Wabtec expects to have additional opportunities to provide products and services in these markets.

The 2022 biennial edition of the study concluded that the rail supply industry faced a moderate annual decline of 0.2% in the 2019 to 2020 period as a result of the negative impacts of the COVID-19 pandemic but forecasts a recovery of the global rail supply market with a compound annual growth rate of 3% through 2027.

As growth continues, Wabtec expects to have additional opportunities to provide products and services in these markets.

New technologies offered by Wabtec can provide solutions to improve safety, cost and reliability of rail, as well as support the modernization of the global rail fleets.

In its study, UNIFE also said it expected increased investment in digitalization, automation, and predictive maintenance through artificial intelligence, all of which would improve efficiency in the global rail industry.

Consistent with the 2020 UNIFE study, increased investment in infrastructure improvements, digitalization and automation is expected, all of which would improve efficiency in the global rail industry.

Business Segments and Products

We provide our products and services through two principal business segments, the Freight Segment and the Transit Segment, both of which have different market characteristics and business drivers.

The Freight Segment primarily manufactures and provides aftermarket parts and services for new locomotives;

provides components for new and existing locomotives and freight cars;

The Freight Segment primarily manufactures new locomotives;

provides aftermarket parts and services to existing locomotives;

provides components to new and existing freight cars;

builds new commuter locomotives;

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and provides heat exchangers and cooling systems for rail and other industrial markets.

Customers include large, publicly traded railroads, leasing companies, manufacturers of original equipment such as locomotives and freight cars, and utilities.

Customers include large, publicly traded railroads, leasing companies, manufacturers of original equipment such as locomotives and freight cars, utilities, and companies in the mining, marine, and industrial markets.

We are the largest global manufacturer of diesel-electric locomotives for freight railroads producing mission-critical products and solutions that help railroads reduce operating costs, decrease fuel use, minimize downtime and comply with emissions standards.

As a result of the large base of approximately 23,000 locomotives currently in use, Wabtec's services product lines of rebuilding, remanufacturing, maintaining, and exchanging locomotives and components in the aftermarkets provides a significant, recurring revenue stream.

As a result of the large base of more than 23,000 locomotives currently in use, Wabtec's Services product lines of modernizing, rebuilding, remanufacturing, maintaining, and exchanging locomotives and components in the aftermarkets provides a significant, recurring revenue stream.

In 2022, the Freight Segment accounted for approximately 72% of Wabtec’s total net sales, with approximately 56% of its net sales in the U.S.

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Approximately half of the Transit Segment’s net sales are in the aftermarket with the remainder in the original equipment market.

Geographically, Faiveley Transport significantly strengthened Wabtec’s presence in the European and Asia Pacific transit markets.

Following is a summary of our leading products in both aftermarket and original equipment across both of our business segments in 2021:

• Diesel-electric and battery powered locomotives for freight and transit

The following is a summary of our leading products in both aftermarket and original equipment across both of our business segments:

• Diesel-electric, battery, and liquid natural gas powered locomotives for freight and transit

• Engines, electric motors and premium propulsion systems used in locomotives, mining, marine, stationary power and drilling applications

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• New commuter and switcher locomotives

• Turbochargers for industrial and aftermarket vehicle applications

• Freight locomotive overhaul, modernizations and refurbishment

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• Unit exchange of locomotive components

• Maintenance of way equipment and services

Transit Products:

• Railway braking equipment and related components for Transit applications, including high-speed passenger transit vehicles

• Railway and freight braking equipment and related components, including high-speed passenger transit vehicles

• Friction products, including brake shoes, discs and pads

• Heating, ventilation and air conditioning equipment

• Doors for buses and subway cars

• Platform screen doors

• Pantographs

• Window assemblies

• Accessibility lifts and ramps for buses and subway cars

• Traction motors

We have become a leader in the freight rail and passenger transit industries by capitalizing on the strength of our existing products, technological capabilities and new product innovations, and by our ability to harden products to protect them from severe conditions, including extreme temperatures and high-vibration environments.

• Access doors and platform screen doors

• Pantographs and third rail collectors

• Energy measuring systems

• Auxiliary power converter and battery charging

• Antifire systems

• Passenger information systems and CCTV

• Signaling and railway electric relays

• Sanitation systems

• Doors, window assemblies, accessibility lifts and ramps for buses

• Electric charging solutions for buses and electric ferries

We are a leader in the freight rail and passenger transit industries by capitalizing on the strength of our existing products, technological capabilities and new product innovations, and by our ability to harden products to protect them from severe

conditions, including extreme temperatures and high-vibration environments.

Supported by our technical staff of more than 6,300 engineers and specialists, we have extensive experience in a broad range of product lines, which enables us to provide comprehensive, systems-based solutions for our customers.

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In 2021, Wabtec and a Class I completed a three month pilot of a battery electric locomotive which reduced fuel consumption and greenhouse gas emissions by an average of 11% in a revenue service train.

In 2022, this battery electric locomotive was recognized for sustainable innovation by the Business Intelligence Group and awarded “Commercial Technology of the Year” at the Platts Global Energy Awards.

In recent years, we have also introduced a number of significant new products, including PTC equipment that encompasses onboard digital data and global positioning communication protocols.

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Other new products include HVAC inverter integrated solutions, brake discs and brake controls, platform doors and gates and door controllers.

For additional information on our business segments, see Note 19 of “Notes to Consolidated Financial Statements” included in Part IV, Item 15 of this report.

For additional information on our business segments, see Note 19 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report.

Competitive Strengths

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• Iconic legacy and strong reputation with a history of over 150 years of innovation .

The rail industry has been in operation for over 150 years and we have been at the forefront of shaping and transforming the rail landscape through various innovations and technologies.

Dating back to 1869 and George Westinghouse’s invention of the air brake, we are an established leader in the rail industry for freight and passenger transit vehicles.

For over 110 years, GE Transportation has served the worldwide rail industry, which is a critical component of the global transportation system and the global economy, with an installed base of more than 23,000 locomotives worldwide.

Faiveley Transport, founded in 1919, has a long history and is a market leader for its core products, including pantographs, automatic door mechanisms and air conditioning systems.

We have leveraged our leading positions by focusing on research and engineering to expand beyond pneumatic braking components to supplying integrated parts and assemblies from a full locomotive through the end of the train.

Wabtec has been at the forefront of shaping and transforming the rail landscape through various innovations and technologies for over 150 years.

We are a recognized leader in the development and production of electronic recording, measuring and communications systems, PTC equipment, highly engineered compressors and heat exchangers for locomotives, and a leading manufacturer of freight car components, including electronic braking equipment, draft gears, trucks, brake shoes, and electronic end-of-train devices.

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Our substantial installed base of products with end-users such as the railroads and the passenger transit authorities is a significant competitive advantage for providing products and services to the aftermarket because these customers often look to purchase safety- and performance-related replacement parts from the original equipment components supplier.

In addition, as OEMs and railroad operators attempt to modernize fleets with new products designed to improve and maintain safety and efficiency, these products must be designed to be interoperable with existing equipment.

Sales of aftermarket parts and services have historically represented approximately 60% of our total net sales.

Sales of aftermarket parts and services typically represent approximately 60% of our total net sales.

• Leading design and engineering capabilities .

We believe a hallmark of our relationship with our customers has been our leading design and engineering practice, which has assisted in the improvement and modernization of global

railway equipment.

We believe a hallmark of our relationship with our customers has been our leading design and engineering practice, which has assisted in the improvement and modernization of global railway equipment.

We believe both our customers and government authorities value our technological capabilities and commitment to innovation, as we seek not only to enhance the efficiency and profitability of our customers, but also to improve the overall safety of the railways through continuous improvement of product performance.

The Company designs, develops and manufactures critical components and systems for the rail, mining and marine industries, which include proprietary propulsion systems, engine platforms and controls technology.

These innovative and differentiated solutions serve as the building blocks for the rail, mining and marine industries, and help keep our global customers at the forefront of advancing technologies.

When coupled with our advanced digital analytic capabilities, our solutions help drive increased energy management, performance and reliability to our products.

To that end, we have assembled a wide range of patented products, which we believe provides us with a competitive advantage.

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We are advancing our sustainability priorities both through our own commitments to our people, communities, and planet, as well as by innovating next generation technologies that reduce emissions, energy consumption and waste, and increase fuel efficiency for our customers through advancements in our equipment and digital solutions.

We are helping our customers reduce their overall carbon footprint through the development of low-emitting locomotives like our Tier 4 and battery-electric locomotives, Trip Optimizer, Green Air and Green Friction products, and the use of alternative fuels such as biodiesel, renewable diesel, and hydrogen.

• Driving the digital transformation of the rail industry .

Our early investment in data analytics and software has allowed us to become a strategic partner for customers looking to derive new value from assets and digitally transform their operations.

Through these initiatives, our digital solutions have helped to transform many distribution channels in the transportation industry including mine to ports, from shipper to receiver, from port to intermodal terminals to main line locomotives and railcars and across train yards and operation centers.

line locomotives and railcars and across train yards and operation centers.

The breadth of our Digital and Electronic solutions gives customers confidence in our ability to address their current and future needs.

• Strategic partnerships with longstanding customers and other key stakeholders.

For more than a century, rail has been a cornerstone of the global transportation system, and thus, the economy.

Rail remains one of the most cost-effective, energy-efficient modes of transport, both domestically and internationally.

As the largest global producer of diesel-electric locomotives, we have a significant market share both in North America and globally.

We listen to our key stakeholders and focus on areas where Wabtec can enable the most meaningful impact for our customers, communities, and the world.

Transformational change requires collaboration, so we are committed to accelerating progress by partnering with customers, government leaders, corporations, universities and other key stakeholders.

For example, we have partnered with a customer, a leading short line and regional freight railroad, as well as a leading artificial intelligence and robotics institution to create technologies that will decarbonize freight rail transport, improve freight safety, and generate greater rail network utilization.

For example, we have partnered with a customer, a leading short line and regional freight railroad, as well as a leading artificial intelligence and robotics institution to create technologies that will further decarbonize freight rail transport, improve freight safety, and generate greater rail network utilization.

We also have collaborated with a global transportation company focused on the development and commercialization of battery technology and hydrogen fuel cell systems for Wabtec locomotives.

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These groups mandate rigorous manufacturer certification and a new product testing and approval processes that we believe are difficult for new entrants to meet cost-effectively and efficiently without the scale and extensive experience we possess.

Certification processes are lengthy, and often require local presence and expertise.

In addition, each transit agency places a high degree of importance on vehicle customization, which requires experience and technical expertise to meet ever-evolving specifications.

• Streamlined cost structure and operational excellence provide operating leverage and support Wabtec’s growth.

Wabtec’s lean manufacturing and continuous improvement initiatives have been a part of the Company’s culture for more than 25 years and have enabled Wabtec to manage successfully through cycles in the rail supply market.

We are continuing to expand our Operating Excellence focus in driving productivity and delighting customers.

Our Operating Excellence Program leverages the breadth and depth of our One Wabtec expertise across the organization in sharing of best practices, instilling a culture of learning, problem solving, continuous improvement, and driving standard operating practices.

This, coupled with our overall manufacturing and supply base footprint optimization initiatives, will drive increased flexibility and improved responsiveness to our customer needs while driving margin improvement through productivity.

We focus on driving continuous operational improvement across the organization by sharing best practices, instilling a culture of learning, problem solving and continuous improvement, and driving standard operating practices.

This culture is illustrated by the launch of Integration 2.0 in 2022.

Business Strategy

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We have over 23,000 locomotives in service, the majority of which are equipped with Digital technologies, like Positive Train Control.

We have components on rail cars in over 100 countries and over 45,000 railway vehicles equipped with Wabtec braking systems.

We intend to increase sales through direct sales of existing products to current and new customers, by developing specific new products for application in new geographic markets, by making strategic acquisitions and through joint ventures with railway suppliers which have a strong presence in their local markets.

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In Transit, we are focused on mature markets such as Europe and emerging markets such as India.

In Freight, we are targeting markets that operate significant fleets of U.S.-style locomotives and freight cars, including Australia, Brazil, China, Egypt, India, Russia, South Africa and other select areas within Europe and South America.

In Freight, we are targeting markets that operate significant fleets of North American-style locomotives and freight cars, including Australia, Brazil, China, Egypt, India, South Africa and other select areas within Europe, Asia and South America.

In addition, we have opportunities to increase the sale of certain products that we currently manufacture for the rail industry into other industrial markets, such as mining, off-highway and energy.

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We have taken significant steps to decarbonize global transport and make our world safer, smarter and greener.

Today, rail represents the cleanest, most energy efficient and safest mode of moving freight and people on land.

Today, rail represents the cleanest, most energy efficient and safest mode of moving freight

and people on land.

As global demands for growth increase, current trends indicate that freight and passenger rail activity will more than double by 2050, leading to an increased demand for sustainable transportation of people and goods.

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Aftermarket sales are typically done at higher margins and are less cyclical than OEM sales because a certain level of aftermarket maintenance and service work must be performed, even during an industry slowdown.

Sales of aftermarket parts and services have historically represented approximately 60% of total net sales.

As a long time supplier of original equipment, we have an extensive installed base of equipment in the field and growing this installed base further will expand our recurring aftermarket sales.

Sales of aftermarket parts and services typically represent approximately 60% of total net sales.

As a long time supplier of original equipment, we have an extensive installed base of equipment in operation and growing this installed base further will expand our recurring aftermarket sales.

Wabtec provides aftermarket parts and services for its components, and we seek to expand this business with customers who currently perform the work in-house.

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We are focused on continuous improvement to drive cost competitiveness, effectively deploy capital and accelerate Lean.

Lean is a set of principles that emphasize customer focus, elimination of waste, high quality growth and ruthless prioritization of work to improve safety, quality, delivery

Lean is a set of principles that emphasize customer focus, elimination of waste, high quality growth and ruthless prioritization of work to improve safety, quality, delivery and cost.

Lean is being embedded in our culture and is fundamental to how we execute our strategy.

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These principles are also rigorously applied to sustainability and safety.

Recent Acquisitions and Joint Ventures

See Note 3 of the Notes to Consolidated Financial Statements included in Part IV, Item 5 of this report for additional information about our recent acquisitions and joint ventures.

The Company’s backlog was approximately $22 billion at December 31, 2021.

For 2021, approximately 60% of total net sales came from aftermarket orders, which typically carry lead times of less than 30 days and are not included in backlog for a significant period of time.

Recent Acquisitions

See Note 3 of “Notes to Consolidated Financial Statements” included in Part II, Item 8 of this report for additional information about our recent acquisitions.

Backlog represents the future sales we expect to recognize on firm orders received from customers and approximates the Company’s remaining performance obligations at the end of each period.

The Company’s total backlog was approximately $22 billion at December 31, 2022.

The Company’s contracts are subject to standard industry cancellation provisions, including cancellations on short notice or upon completion of designated stages.

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The railroad industry, in general, has historically been subject to fluctuations due to overall economic conditions and the level of use of alternative modes of transportation.

The rollforward of the Company's backlog of firm customer orders and the expected year of completion are as follows:

The roll forward of the Company's backlog of firm customer orders and the expected year of completion are as follows:

In millions Freight Segment Transit Segment Consolidated

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Net sales (6,012) (2,350) (8,362)

Adjustments / foreign exchange (110) (217) (327)

Adjustments / foreign exchange, net (143) (259) (402)

Balance at December 31, 2022 $ 18,641 $ 3,800 $ 22,441

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Other years $ 13,740 $ 1,941 $ 15,681

The Company saw no significant cancellations of backlog during the year ended December 31, 2021 despite the unprecedented pandemic caused by COVID-19 and its effects on locomotive parkings, carbuilds, and transit ridership levels.

However, the economic slowdown and disruptions that were caused by COVID-19 did impact the timing of some orders in backlog as in certain cases the delivery of goods and services previously expected to be completed in the current year has been pushed out to future years.

Although the current unfavorable global economic conditions have not resulted in any material cancellations, they have impacted the timing of some orders in backlog as, in certain cases, the delivery of goods and services were pushed out from their original timelines.

Engineering and Development

To execute our strategy to develop new products, we invest in a variety of engineering and development activities.

For the fiscal years ended December 31, 2021, 2020 and 2019, we invested $176 million, $162 million and $210 million, respectively, on product development and improvement activities.

Significant incremental engineering expense is incurred with the execution of original equipment customer contracts.

Across the corporation we have established multiple Centers of Competence, which have specialized, technical expertise in various disciplines and product areas.

Our engineering and development program includes investments in data analytics, train control and other new technologies, with an emphasis on developing products that enhance safety, productivity and efficiency for our customers.

For the fiscal years ended December 31, 2022, 2021 and 2020, we invested $209 million, $176 million and $162 million, respectively, in engineering for product development and improvement activities.

Significant incremental engineering expense can be incurred with the execution of original equipment customer contracts.

Across the Company we have established multiple Centers of Competence, which have specialized, technical expertise in various disciplines and product areas.

Our engineering and development program includes investments in data analytics, train control and other new technologies, such as battery-electric, liquid natural gas and hydrogen-powered locomotives, with an emphasis on developing products that enhance safety, productivity and efficiency for our customers.

For example, we have developed advanced cooling systems that enable lower emissions from diesel engines used in rail and other industrial markets.

Sometimes we conduct specific research projects in conjunction with universities, customers and other industry suppliers.

We periodically conduct specific research projects in conjunction with universities, customers and other industry suppliers.

We use our product development system to develop and monitor new product programs.

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We also rely on a combination of trade secrets and other intellectual property laws, nondisclosure agreements and other protective measures to establish and protect our proprietary rights in our intellectual property.

We also follow the product development practices of our competitors to monitor any possible patent infringement by them, and to evaluate their strategies and plans.

Certain trademarks, among them the name WABCO ® , were acquired or licensed from American Standard Inc., now known as Trane, in 1990 at the time of our acquisition of the North American operations of the Railway Products Group of Trane.

Other trademarks have been developed through the normal course of business or acquired as a part of our ongoing merger and acquisition program.

We actively monitor competitor patent issuance during our product development to reduce litigation risks, and we follow their product development practices to monitor possible patent infringement by them, and to evaluate their strategies and plans.

Trademarks we utilize can be licensed from other companies, acquired as part of mergers or acquisitions, or have been developed through the normal course of business.

We have entered into a variety of license agreements as licensor and licensee.

We do not believe that any single license agreement is of material importance to our business or either of our business segments as a whole.

We do not believe that any single license agreement is of material importance to our business or any of our business segments as a whole.

We provide products and services for more than 500 customers worldwide.

Our customers include passenger transit authorities and railroads throughout North America, Europe, Asia Pacific, Africa and South America;

manufacturers of transportation equipment, such as locomotives, freight cars, passenger transit vehicles and buses;

and companies that own, lease, and maintain such equipment.

manufacturers of transportation equipment, such as locomotives, freight cars, passenger transit vehicles and buses and companies that own, lease, and maintain such equipment, as well as customers in the mining, marine, and industrial markets.

Top customers can change from year to year.

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Within North America, New York Air Brake Company, a subsidiary of the German air brake producer Knorr-Bremse AG (“Knorr”) and Amsted Rail Company, Inc., a subsidiary of Amsted Industries Corporation, are our principal overall OEM competitors.

Our competition for locomotive, freight and passenger transit service and repair is mostly from the railroads’ and passenger transit authorities’ in-house operations, Electro-Motive Diesel, a division of Caterpillar, and Knorr.

Our primary competition for locomotives is Electro-Motive Diesel, a division of Caterpillar.

Our primary competition for freight and passenger transit service and repair is mostly from the railroads’ and passenger transit authorities’ in-house operations and Knorr.

We believe our key strengths, which include leading market positions in core products, including sustainable technologies, breadth of product offering with a stable mix of OEM and aftermarket business, leading design and engineering capabilities, significant barriers to entry, strategic partnerships and operational excellence, coupled with an experienced management team, enable us to compete effectively in this marketplace.

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Depending on the product line and geography, we can also compete with our customers, such as CRRC Corporation Limited, a China-based manufacturer of rolling stock.

Environmental, Social and Governance

Sustainability

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As we develop and refine our sustainability strategy, it is important that we listen to our key stakeholders and focus on areas where Wabtec can enable the most meaningful impact for our customers, communities and the world.

In 2021, we conducted a comprehensive Environmental, Social and Governance (ESG) assessment that included internal and external

stakeholder involvement, to identify key ESG issues of focus for the Company.

Based on the assessment, the following topics had the highest relative priority to Wabtec and its external stakeholders and are aligned to our overall sustainability strategy and action plans:

In 2021, we conducted a comprehensive Environmental, Social and Governance ("ESG") assessment that included internal and external stakeholder involvement, to identify key ESG issues of focus for the Company.

Based on the assessment, we identified topics with the highest relative priority to Wabtec and its external stakeholders that are aligned to our overall sustainability strategy and action plans:

Topic Definition Alignment to Wabtec Strategic Sustainability Principles

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• Energy efficiency

Cybersecurity Framework

Cybersecurity and data protection are important considerations in the design and production of Wabtec products, projects, and services.

Information technology is used and relied upon extensively by our business.

We collect, process, and retain sensitive and confidential customer information, including proprietary business information, personal data and other information, some of which may be subject to privacy and security laws, regulations and/or customer-imposed data protection controls.

To address risks related to cybersecurity and privacy, Wabtec seeks to leverage industry cybersecurity practices that have been developed by organizations such as National Institute of Standards and Technology (NIST) and the International Standardization Organization (ISO) and also engages external independent advisors.

Wabtec’s Data Protection Plan describes the technical, physical and administrative controls used to protect the confidentiality, integrity, and availability of information provided to and managed by Wabtec.

Cybersecurity is addressed and discussed regularly with our Chief Information Officer, the Audit Committee and Board of Directors.

Wabtec also maintains SOC 1 Type 2 certification for select digital products, as well as cyber liability insurance coverage.

We also regularly evaluate our response readiness, including disaster recovery plans and business continuity considerations in the case of a cyber incident.

Finally, Wabtec engages in regular security awareness training to highlight and educate its employees on how to identify and mitigate cybersecurity risks at the individual level.

During 2022, Wabtec issued the 2022 Green Bond Report.

This report describes our Green Bond Program and summarizes the full utilization of the green bond proceeds and allocation of the expenditures to our five focus areas.

See "Available Information," below .

Wabtec is committed to transparency on ESG topics, including the opportunities and challenges we encounter as we work to enhance performance and conduct business in a responsible manner.

In 2020, we established ESG goals around innovation, operations, safety, and people.

We report our progress on these goals annually in our published Sustainability Report, which can be found on our website at www.wabteccorp.com/sustainability .

The content referred to on any website referred to in this annual report, including the Sustainability Report, is not incorporated by reference into this Form 10-K.

We report our progress on these goals in our annual Sustainability Report.

See "Available Information," below.

Wabtec developed an ESG governance framework to provide oversight for our climate action strategy.

This structure starts with Wabtec's Board of Directors and its committees who oversee the execution of the Company’s ESG strategy as part of their oversight of Wabtec’s overall business.

In particular, the Nominating and Corporate Governance Committee assists the Board in its oversight of Wabtec’s sustainability strategy and execution against key goals, as well as the review of climate-related risks and opportunities.

To further facilitate the Board’s engagement and oversight, climate was added as a risk category in Wabtec’s enterprise risk management process.

In particular, the Board established the Environmental, Social and Governance Subcommittee ("ESG Subcommittee") of the Nominating and Corporate Governance Committee to support and provide oversight of Wabtec’s sustainability strategy and ongoing commitment to ESG matters relevant to Wabtec, including complying with all applicable laws and regulations affecting the health and safety of our employees and stakeholders, as well as protection of the environment (including climate) and other public policy matters.

To further facilitate the Board’s engagement and oversight, ESG was added as a risk category in Wabtec’s enterprise risk management process.

Human Capital

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We are committed to driving an inclusive culture and integrating our talent and capabilities across the enterprise.

As a company, we believe that protecting the health and safety of our people and the environment is the responsibility of everyone at Wabtec, especially during a global pandemic.

As a Company, we believe that protecting the health and safety of our people and the environment is the responsibility of everyone at Wabtec.

Our headquarters are in Pittsburgh, Pennsylvania and we have offices and facilities in over 50 countries around the globe.

As of December 31, 2022, we have a global workforce of approximately 27,000 employees, excluding contingent workers.

A portion of our workers are represented by labor unions.

For 2023, the United Electrical, Radio and Machine Workers of America (UE), Locals 506 and 618 collective bargaining agreement, covering approximately 1,400 locomotive manufacturing workers in Erie, Pennsylvania, expires on June 9, 2023.

Negotiations with UE will begin in 2023.

The Company continuously monitors its labor activity.

Diversity and Inclusion

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We strive to create an inclusive workplace where employees can be themselves.

During 2022, we created the position of Global Diversity & Inclusion Leader to drive progress on our commitment to promoting diversity and fostering an inclusive workplace that attracts, develops and retains diverse talent.

Our Board of Directors also plays a critical role in creating an organization that prioritizes, supports, and invests in diversity, inclusion, and equity.

Over the last two years, Wabtec has named three diverse

members to its Board.

Currently, 40% of Wabtec’s Board is diverse (gender;

race/ethnicity), and over 18% of Wabtec’s global senior management are female and roughly 18% are people of color based in the U.S.

Over the last three years, Wabtec has named three diverse members to its Board, with 55% of Wabtec’s Board currently considered diverse (gender;

race/ethnicity).

In 2021, women constituted approximately 17% of our global workforce and approximately 19% of our salaried employees, and people of color constituted approximately 20% of our U.S.

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In 2021, Wabtec partnered with a third-party to provide diversity and inclusion training.

Over 4,000 employees participated in the training, which was coupled with tools and resources for people leaders to help make diversity and inclusion part of a long-term conversation rather than a one-time training.

In 2022, Wabtec continued this partnership, refining the program to our company-wide initiatives.

Over 5,000 employees have participated in the training, which was coupled with tools and resources for people leaders to help make diversity and inclusion part of a long-term conversation rather than a one-time training.

Our two-year Leadership, Expertise, Advancement and Development ("LEAD") program is the primary path for university graduates into Wabtec.

LEAD is a two-year program that offers an immersive learning experience in the fields of engineering, operations, finance and IT along with extensive leadership training designed to build the next generation of leaders.

On average, there are 100 participants in the LEAD program that rotate between business units every six months to work on strategic projects and assignments, gain exposure to senior leadership and build their global professional network.

On average, there are 100 participants in the LEAD program that rotate between business units every six months to

work on strategic projects and assignments, gain exposure to senior leadership and build their global professional network.

We are focused on strengthening this program to support our global talent pipeline.

Health and Safety

When it comes to employee safety, our commitment is to provide safe work environments for our employees and to meet or exceed environmental, health, and safety (EHS) laws and regulations in the places where we operate.

In 2020, the Company relaunched the Environment, Health, and Safety component of the Wabtec Management System (known as the “EHS WMS”) to strengthen our management system approach to addressing EHS risks and promote the consistent implementation of best practices across all our global manufacturing and services sites, regardless of how local laws are implemented or enforced.

The EHS WMS establishes standard expectations in 13 core competency areas, including leadership and accountability, regulatory applicability review, EHS processes and systems, risk assessment, safety defenses, exposure defenses, environmental defenses

and contractor management.

Operational sites are measured against these EHS program expectations.

In addition, the Company’s EHS WMS is directly aligned to accepted international standards, such as ISO 14001 for Environmental and ISO 45001 for Occupational Health and Safety.

With zero fatalities and over 80 operational sites with zero recordable injuries, 2020 marked the 13th consecutive year of injury rate reductions across Wabtec's vast operations.

In 2021, Wabtec continued its commitment to safety and launched a four week EHS leadership training course aimed at building the toolkits of front-line supervisors and plant managers.

The course was designed to establish a common understanding of Wabtec’s EHS tools and terminology, initiate a partnership between the plant manager and their EHS leader on a personal action plan, connect plant managers to the broader network of global leaders, and encourage decision making at the site level that is informed by an understanding of EHS impacts and of legal and compliance responsibilities.

In 2021, over 120 leaders from 26 countries attended the training.

The pandemic has reinforced the importance of keeping Wabtec employees safe and healthy while keeping essential rail services and the global economy moving.

When the pandemic began, Wabtec launched its COVID-19 Crisis Management Team, which met daily to focus on three key elements:

protecting our people, serving our customers, and ensuring business continuity.

Manufacturing and office locations were required to implement risk assessment methodologies and rethink work practices to allow for remote working or social distancing, develop new procedures for workplace entry, strengthen site-level crisis management teams and implement new tools for rapid communication with site employees.

Site leaders and people managers were trained on techniques for communicating transparently and navigating complex business decisions during a crisis.

Environmental, Health and Safety

At Wabtec, our commitment to environmental, health and safety ("EHS") is at the heart of our core values.

The well-being of our employees, the communities where we operate, and our customers and their customers depends on it.

To ensure operational accountability for EHS across all levels of Wabtec, we use standard metrics (both lagging and leading indicators) and structured management reviews to track and measure EHS performance across all our operational sites.

Each site is responsible for developing a risk reduction plan to drive site or project-level actions related to risk reduction, employee engagement, and continuous EHS improvement.

Monthly EHS operating reviews with the Executive Vice President for Global Operations are used to review operational risks at the enterprise-level, develop strategic initiatives, and communicate key performance indicators to senior management.

In 2022, we continued our progress toward best-in-class EHS performance by strengthening our focus on compliance assurance, risk reduction, and learning and development.

We also continued our efforts to comprehensively deploy and validate effective and consistent adherence with the Environment, Health, and Safety component of the Wabtec Management System (known as the “EHS WMS”) to strengthen our management system approach to addressing EHS risks and promote the consistent implementation of best practices across all our global manufacturing and services sites, regardless of how local laws are implemented or enforced.

We also improved our focus on proactive risk reduction in our operations by conducting monthly incident review sessions with our site Operations and EHS teams to review common incidents, discuss corrective actions, and share best practices.

Through these enhanced incident learning efforts, our Operations and EHS teams are partnering to eliminate and reduce hazards and risks within Wabtec’s operations, which is fundamental to improved EHS performance.

With zero fatalities and over 65 operational sites with zero recordable injuries, 2022 saw a 10% injury rate reduction across Wabtec's operations as compared with 2021.

In 2022, Wabtec continued its EHS leadership training course aimed at building the toolkits of general managers and plant managers to empower them as critical stewards of our EHS culture.

This course instills Wabtec’s EHS expectations of its Operational Leaders by providing an awareness of EHS impacts and legal and compliance responsibilities, practical tips for achieving and maintaining EHS excellence, and ideas for cultivating a positive culture and engaging employees to take ownership for EHS.

As of 2022, approximately 175 leaders from over 25 countries have attended the training.

Compensation and Benefits

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We provide our employees resources to help them succeed.

We offer a wide range of benefits including healthcare and wellness benefits, retirement benefits, an Employee Assistance Program, Employee Resource Groups to build diverse communities at Wabtec, and paid time off.

We offer a wide range of benefits including healthcare and wellness benefits, retirement benefits, an Employee Assistance Program, Employee Resource Groups to build diverse and inclusive communities at Wabtec, and paid time off.

Cybersecurity Framework

Cybersecurity and data protection are important considerations in the design and production of Wabtec products, projects, and services.

Information technology is used and relied upon extensively by our business.

Cybersecurity is addressed and discussed regularly with our Chief Information Officer, the Audit Committee and Board of Directors.

Wabtec also maintains SOC 1 Type 2 certification for select digital products, as well as cyber liability insurance coverage.

We also regularly evaluate our response readiness, including disaster recovery plans and business continuity considerations in the case of a cyber incident.

Finally, Wabtec engages in regular security awareness training to highlight and educate its employees on how to identify and mitigate cybersecurity risks at the individual level.

In the course of our operations, we are subject to various regulations and standards of governments and other agencies in the U.S.

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New products generally must undergo testing and approval processes that are rigorous and lengthy.

As a result of these regulations and requirements, we must usually obtain and maintain certifications in a variety of jurisdictions and countries.

As a result of these regulations and requirements, we must usually obtain and

maintain certifications in a variety of jurisdictions and countries.

The governing bodies include the FRA and the Association of American Railroads ("AAR") in the U.S., and the International Union of Railways (“UIC”) and the European Railway Agencies in Europe.

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Most countries and regions in which Wabtec does business have similar rule-making bodies.

For example, in Russia, a GOST-R certificate of conformity is mandatory for all products related to the safety of individuals in Russian territory.

In China, any product or system sold on the Chinese market must have been certified in accordance with national standards.

For example, in China any product or system sold on the Chinese market must have been certified in accordance with national standards.

In the local Indian market, most products are covered by regulations patterned after AAR and UIC standards.

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Environmental Matters

The Company is subject to a variety of environmental laws and regulations governing discharges to air and water, the handling, storage and disposal of hazardous or solid waste materials and the remediation of contamination associated with

releases of hazardous substances.

The Company believes its operations currently comply in all material respects with all of the various environmental laws and regulations applicable to our business;

The Company's operations and products are subject to a variety of environmental laws and regulations governing air emissions, discharges into water, the use, handling, storage, and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances.

The Company believes its operations and products currently comply in all material respects with all of the various environmental laws and regulations applicable to our business;

however, there can be no assurance that environmental requirements will not change in the future or that we will not incur significant costs to comply with such requirements.

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We maintain a website at www.wabteccorp.com.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as the annual report to stockholders and other information, are available free of charge on this site.

Available free of charge on this site are:

our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as the annual report to stockholders, our Green Bond Report (www.wabteccorp.com/investor-relations/green-finance-framework), our Sustainability Report (www.wabteccorp.com/sustainability), and other information.

The Internet site and the information contained therein or connected thereto are not incorporated by reference into this Form 10-K.

The following are also available free of charge on this site and are available in print to any shareholder who requests them:

Our Corporate Governance Guidelines, the charters of our Audit, Compensation and Nominating and Corporate Governance Committees, our Code of Conduct, which is applicable to all employees, our Code of Ethics for Senior Officers, which is applicable to our executive officers, our Policies on Related Party Transactions and Conflict Minerals, and our Sustainability Report.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

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Mastalerz 56 Senior Vice President of Finance and Chief Accounting Officer

Kristine Kubacki 48 Vice President, Investor Relations

Rafael Santana was named President and Chief Executive Officer of the Company effective July 1, 2019.

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Sbrocco was Global Supply Chain Leader for GE Transportation since September 2014.

Sbrocco had been with GE since 1992 when he

joined as an Environmental Engineer for the GE Energy business.

Sbrocco had been with GE since 1992 when he joined as an Environmental Engineer for the GE Energy business.

During his tenure with GE, Mr.

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Mastalerz was a Senior Manager with PricewaterhouseCoopers LLP.

Kristine Kubacki was named Vice President of Investor Relations in April 2019.

Previously, Ms.

Kubacki was on Wall Street from January 2004 to April 2019 as a sell-side equity analyst covering industrials and served as Executive Director and Senior Analyst for the transportation, logistics and equipment sector at Mizuho Securities USA from June 2017 to April 2019, as well as Director of Equity Research for the global industrial equipment industry at CLSA from July 2016 to March 2017.

Kubacki prior to her role at CLSA spent nearly nine years covering the industrial sector at Avondale Partners, as well as operations management, process design and supply chain management positions at Procter and Gamble.

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What changed 10-K

Item 1. Business