What changed in this filing

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Item 1. Financial Statements

2024-04-24 compared with 2023-10-25 · 200 added, 228 removed, 527 unchanged (45% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

In millions, except par value September 30,

In millions, except par value March 31,

2024 December 31,

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Deferred income taxes 321 318

Contingent consideration 49 47

Other long-term liabilities 710 740

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500.0 shares authorized and 226.9 shares issued:

179.1 and 181.2 outstanding at September 30, 2023 and December 31, 2022, respectively

176.8 and 177.8 outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 7,967 7,977

Treasury stock, at cost, 47.8 and 45.7 shares, at September 30, 2023 and December 31, 2022, respectively

Treasury stock, at cost, 50.1 and 49.1 shares, at March 31, 2024 and December 31, 2023, respectively

( 2,345 ) ( 2,171 )

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited Unaudited

Three Months Ended

September 30, Nine Months Ended

September 30,

In millions, except per share data 2024 2023

15 unchanged sentences

Interest expense, net ( 47 ) ( 48 )

Other income, net 10 4 17 15

Other (expense) income, net ( 2 ) 5

Income before income taxes 363 233

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited Unaudited

Three Months Ended

September 30, Nine Months Ended

September 30,

In millions 2024 2023

Net income attributable to Wabtec shareholders $ 272 $ 169

Foreign currency translation loss ( 106 ) ( 170 ) ( 82 ) ( 352 )

Foreign currency translation (loss) gain ( 88 ) 25

Unrealized gain on derivative contracts 13 5

Unrealized gain on pension benefit plans and post-retirement benefit plans 1 1

Other comprehensive loss before tax ( 82 ) ( 164 ) ( 42 ) ( 338 )

Other comprehensive (loss) income before tax ( 74 ) 31

Income tax expense related to components of other comprehensive income ( 3 ) ( 1 )

Other comprehensive loss, net of tax ( 89 ) ( 167 ) ( 52 ) ( 342 )

Comprehensive income (loss) attributable to Wabtec shareholders $ 151 $ ( 7 ) $ 548 $ 133

Other comprehensive (loss) income, net of tax ( 77 ) 30

Comprehensive income attributable to Wabtec shareholders $ 195 $ 199

The accompanying notes are an integral part of these statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

In millions 2024 2023

1 unchanged sentence

Net income $ 277 $ 173

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation and amortization 123 123

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Other assets and liabilities ( 55 ) ( 26 )

Net cash provided by operating activities 515 628

Net cash provided by (used for) operating activities 334 ( 25 )

Investing Activities

Acquisitions of businesses, net of cash acquired ( 227 ) ( 69 )

Purchase of property, plant and equipment ( 31 ) ( 32 )

7 unchanged sentences

Payment of income tax withholding on share-based compensation ( 23 ) ( 14 )

Distribution to noncontrolling interest ( 12 ) —

Other financing activities 3 ( 3 )

1 unchanged sentence

Effect of changes in currency exchange rates ( 7 ) 5

(Decrease) increase in cash ( 149 ) 41

Increase (decrease) in cash 19 ( 124 )

Cash, cash equivalents and restricted cash, beginning of period 620 541

10 unchanged sentences

Net income — — — — — 272 — 5 277

Other comprehensive income, net of tax — — — — — — 30 — 30

Other comprehensive loss, net of tax — — — — — — ( 77 ) — ( 77 )

Stock repurchase — — — ( 1.3 ) ( 176 ) — — — ( 176 )

Balance, March 31, 2024 226.9 $ 2 $ 7,967 ( 50.1 ) $ ( 2,345 ) $ 5,505 $ ( 667 ) $ 42 $ 10,504

Cash dividends ($ 0.17 dividend per share)

— — — — — ( 31 ) — — ( 31 )

Proceeds from treasury stock issued from the exercise of stock options and other benefit plans, net of tax — — ( 3 ) 0.1 3 — — — —

Stock based compensation — — 12 — — — — — 12

Net income — — — — — 191 — 2 193

Other comprehensive income, net of tax — — — — — — 7 — 7

Stock repurchase — — — ( 0.8 ) ( 76 ) — — — ( 76 )

Distribution to noncontrolling interest — — — — — — — ( 12 ) ( 12 )

Balance, June 30, 2023 226.9 $ 2 $ 7,949 ( 47.8 ) $ ( 2,014 ) $ 4,875 $ ( 624 ) $ 39 $ 10,227

Cash dividends ($ 0.17 dividend per share)

— — — — — ( 30 ) — ( 30 )

Proceeds from treasury stock issued from the exercise of stock options and other benefit plans, net of tax — — 2 — 1 — — — 3

Stock based compensation — — 14 — — — — — 14

Net income — — — — — 240 — 2 242

Other comprehensive loss, net of tax — — — — — — ( 89 ) — ( 89 )

Balance, September 30, 2023 226.9 $ 2 $ 7,965 ( 47.8 ) $ ( 2,013 ) $ 5,085 $ ( 713 ) $ 41 $ 10,367

In millions Common Stock Shares Common Stock Amount Additional Paid-in Capital Treasury Stock Shares Treasury Stock Amount Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interest Total

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Balance, March 31, 2023 226.9 $ 2 $ 7,940 ( 47.1 ) $ ( 1,941 ) $ 4,715 $ ( 631 ) $ 49 $ 10,134

Cash dividends ($ 0.15 dividend per share)

— — — — — ( 27 ) — — ( 27 )

Proceeds from treasury stock issued from the exercise of stock options and other benefit plans, net of tax — — ( 1 ) 0.1 4 — — — 3

Stock based compensation — — 10 — — — — — 10

Net income — — — — — 166 — 3 169

Other comprehensive loss, net of tax — — — — — — ( 192 ) — ( 192 )

Stock repurchase — — — ( 1.1 ) ( 103 ) — — — ( 103 )

Balance, June 30, 2022 226.9 $ 2 $ 7,926 ( 45.0 ) $ ( 1,696 ) $ 4,314 $ ( 641 ) $ 42 $ 9,947

Cash dividends ($ 0.15 dividend per share)

— — — — — ( 28 ) — — ( 28 )

Proceeds from treasury stock issued from the exercise of stock options and other benefit plans, net of tax — — 1 — — — — — 1

Stock based compensation — — 10 — — — — — 10

Net income — — — — — 160 — 3 163

Other comprehensive loss, net of tax — — — — — — ( 167 ) — ( 167 )

Stock repurchase — — — — ( 1 ) — — — ( 1 )

Balance, September 30, 2022 226.9 $ 2 $ 7,937 ( 45.0 ) $ ( 1,697 ) $ 4,447 $ ( 808 ) $ 44 $ 9,925

The accompanying notes are an integral part of these statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023 (UNAUDITED)

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024 (UNAUDITED)

Except as the context otherwise requires, all references to “we”, “our”, “us”, the “Company” and “Wabtec” refer to Westinghouse Air Brake Technologies Corporation and its consolidated subsidiaries.

References to the “Parent Company” refer to Westinghouse Air Brake Technologies Corporation alone.

Wabtec is 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, as well as the mining, marine and industrial markets.

Wabtec is a global provider of value-added, technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries, as well as the mining, marine and industrial markets.

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.

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Wabtec is a global company with operations in over 50 countries and our products can be found in more than 100 countries throughout the world.

In the first nine months of 2023, approximately 55 % of the Company’s Net sales came from customers outside the United States.

In the first three months of 2024, approximately 50 % of the Company’s Net sales came from customers outside the United States.

ACCOUNTING POLICIES

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Certain prior year amounts have been reclassified, where necessary, to conform to the current year presentation.

Results for these interim periods are not necessarily indicative of results to be expected for the full year particularly in light of ongoing volatility in the macroeconomic environment caused by supply chain disruptions, labor availability, broad-based inflation, and the impacts resulting from Russia's invasion of Ukraine.

These factors continue to impact our sales channels, supply chain, manufacturing operations, workforce, and other key aspects of our operations.

We are unable to reasonably predict the full impact of these factors due to the high degree of uncertainty regarding their duration and severity, their potential impact on global economic activity, and the impact that current and new sanctions may have on our business, global supply chain operations and our customers, suppliers, and end-markets.

As of September 30, 2023, Wabtec had approximately $ 2 million of cash related to Russian operations which will be utilized to settle remaining obligations in Russia.

Assets related to Ukraine and Belarus operations are no t significant.

The Company operates on a four-four-five week accounting quarter, and the quarters end on or about March 31, June 30, September 30, and December 31.

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The input methods used for these agreements include costs of material and labor, both of which give an accurate representation of the progress made toward complete satisfaction of a particular performance obligation.

may also use the output method which recognizes revenue based on direct measurements of the value transferred to the customer.

The Company may also use the output method which recognizes revenue based on direct measurements of the value transferred to the customer.

Contract revenues and cost estimates are reviewed and revised periodically throughout the year and adjustments are reflected in the accounting period as such amounts are determined.

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Remaining performance obligations represent the allocated transaction price of unsatisfied or partially unsatisfied performance obligations.

As of September 30, 2023, the Company's remaining performance obligations were approximately $ 21.4 billion.

As of March 31, 2024, the Company's remaining performance obligations were approximately $ 22.1 billion.

The Company expects to recognize revenue of approximately 35 % of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

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The bankruptcy remote subsidiary is a separate legal entity with its own creditors, and its assets are not available to pay creditors of the Company or any other affiliates of the Company.

As customers pay their balances, we transfer additional receivables into the program, which could result in our gross receivables sold being higher or lower than collections reinvested for any applicable period.

As customers pay their balances, we transfer additional receivables into the program, which could result in our gross receivables sold being higher or lower than customer collections remitted to the financial institution for any applicable period.

The sold receivables are fully guaranteed by our bankruptcy-remote subsidiary, which holds additional receivables that are pledged as collateral under this facility.

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Neither the Company (except for the bankruptcy-remote consolidated subsidiary referenced above) nor the Originators guarantees the collectability of the receivables under the revolving agreements.

At September 30, 2023 and December 31, 2022, the bankruptcy-remote subsidiary held receivables of $ 745 million and $ 458 million, respectively, which are included in the Company's Condensed Consolidated Balance Sheets.

The receivables held by the bankruptcy-remote subsidiary collateralize the outstanding receivables sold, which were $ 235 million and $ 80 million at September 30, 2023 and December 31, 2022, respectively.

At March 31, 2024 and December 31, 2023, the bankruptcy-remote subsidiary held receivables of $ 531 million and $ 674 million, respectively, which are included in the Company's Condensed Consolidated Balance Sheets.

The receivables held by the bankruptcy-remote subsidiary collateralize the outstanding receivables sold, which were $ 230 million and $ 20 million at March 31, 2024 and December 31, 2023, respectively.

The transfers are recorded at the fair value of the proceeds received and obligations assumed less derecognized receivables.

No obligation was recorded at September 30, 2023 or December 31, 2022 as the estimated expected credit losses on receivables sold is insignificant.

No obligation was recorded at March 31, 2024 or December 31, 2023 as the estimated expected credit losses on receivables sold is insignificant.

Our maximum exposure to losses related to these receivables transferred is limited to the amount outstanding.

The following table sets forth a summary of receivables sold:

In millions Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

The following table sets forth a summary of receivables sold and the resulting impact of net cash proceeds included in cash from operations:

In millions Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Gross receivables sold/cash proceeds received $ 519 $ 519

Collections reinvested under revolving receivables agreement ( 1,875 ) ( 1,076 )

Net cash proceeds received $ 155 $ 205

Restricted Cash At September 30, 2023 and December 31, 2022, the Company classified cash of $ 7 million as restricted for cash held in escrow related to a 2022 acquisition.

Customer collections remitted to financial institution ( 309 ) ( 374 )

Net cash proceeds received included in cash from operations $ 210 $ 145

Restricted Cash At March 31, 2024 and December 31, 2023, the Company classified cash of $ 5 million as restricted for cash held in escrow related to a 2022 acquisition.

Depreciation Expense Depreciation of property, plant and equipment related to the manufacturing of products or services provided is included in Cost of goods or Cost of services.

Depreciation of other property, plant and equipment that is not attributable to the manufacturing of products or services provided is included in Selling, general and administrative expenses or Engineering expenses to the extent the property, plant, and equipment is used for research and development purposes.

Depreciation of other property, plant and equipment that is not attributable to the manufacturing of products or services provided is included in Selling, general and administrative

expenses or Engineering expenses to the extent the property, plant, and equipment is used for research and development purposes.

Goodwill and Intangible Assets Goodwill and other intangible assets with indefinite lives are not amortized.

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The Company performs its annual impairment test during the fourth quarter after the annual forecasting process is completed, and also tests for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Periodically, management of the Company assesses whether or not an indicator of impairment is present that would necessitate an impairment analysis to be performed.

Accounting Standards Recently Adopted In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Obligations.

The amendments in this update outline specific quantitative and qualitative disclosure requirements for entities that use supplier finance programs in connection with the purchase of goods or services.

The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs.

The amendments in this update were effective for Wabtec's reporting periods beginning January 1, 2023, except for the amendments on roll forward information which will be effective for reporting periods beginning January 1, 2024.

The amendments will require increased interim and annual disclosures be provided on current and comparable reporting periods presented in annual and interim company filings.

The Company has entered into supply chain financing arrangements with third-party financial institutions to provide our vendors with enhanced payment options while providing the Company with added working capital flexibility.

The Company does not provide any guarantees under these arrangements, does not have an economic interest in our supplier's voluntary participation, does not receive an economic benefit from the financial institutions, and no assets are pledged under the arrangements.

The arrangements do not change the payable terms negotiated by the Company and our vendors, which range between net 45 and net 180 days, and does not result in a change in the classification of amounts due as Accounts payable in the Condensed Consolidated Balance Sheets.

Suppliers utilized the program to accelerate receipt of payment from these financial institutions for $ 317 million and $ 296 million of the Company's outstanding Accounts payable as of September 30, 2023 and December 31, 2022, respectively.

The supplier invoices included under the program require payment in full to the financial institutions consistent with the Company’s normal terms and conditions as agreed upon with the vendor.

Accumulated Other Comprehensive Loss Comprehensive income (loss) comprises both Net income and Other comprehensive (loss) income resulting from the change in equity from transactions and other events and circumstances from non-owner sources.

The changes in Accumulated other comprehensive loss by component, including any tax impacts, for the three months ended September 30, 2023 and 2022 are as follows:

Foreign currency translation Derivative contracts Pension and postretirement benefit plans Total

In millions 2023 2022 2023 2022 2023 2022 2023 2022

Balance at June 30 $ ( 572 ) $ ( 578 ) $ 4 $ ( 2 ) $ ( 56 ) $ ( 61 ) $ ( 624 ) $ ( 641 )

Other comprehensive (loss) income, net ( 106 ) ( 170 ) 16 — 1 3 ( 89 ) ( 167 )

Balance at September 30 $ ( 678 ) $ ( 748 ) $ 20 $ ( 2 ) $ ( 55 ) $ ( 58 ) $ ( 713 ) $ ( 808 )

The changes in Accumulated other comprehensive loss by component, including any tax impacts, for the nine months ended September 30, 2023 and 2022 are as follows:

The Company will perform either a qualitative or quantitative test for goodwill, performing a quantitative test for each identified reporting unit at least every three years.

Periodically, Management of the Company assesses whether or not an indicator of impairment is present that would necessitate an impairment analysis be performed.

No impairment indicators were identified during the current quarter.

Accounting Standards Recently Issued In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition to the current requirements, the amendments specify additional information be provided about the chief operating decision maker ("CODM") as well as disaggregated expense categories, to the extent that the CODM utilizes such data in deciding how to allocate resources.

The amendments in this update do not affect the recognition, measurement, or financial statement presentation of expenses, and will be effective for Wabtec's annual reporting periods beginning January 1, 2024 and interim reporting periods beginning January 1, 2025.

The amendments will require increased interim and annual disclosures on current and comparable reporting periods presented in annual and interim company filings.

The Company is assessing the extent of the impact of the amendments on its future filings.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this update require entities to disclose on an annual basis specific categories within the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

The amendments in this update also require enhanced disaggregation of disclosures about income taxes paid and income tax expense, among other changes.

The amendments in this update do not affect the recognition, measurement, or financial statement presentation of income taxes and will be effective for Wabtec's annual reporting periods beginning January 1, 2025.

The amendments will require increased annual disclosures on current and comparable reporting periods presented in annual and interim company filings.

The Company is assessing the extent of the impact of the amendments on its future filings.

Accumulated Other Comprehensive Loss Comprehensive (loss) income comprises both Net income and Other comprehensive (loss) income resulting from the change in equity from transactions and other events and circumstances from non-owner sources.

The changes in Accumulated other comprehensive loss by component, including any tax impacts, for the three months ended March 31, 2024 and 2023 are as follows:

Foreign currency translation Derivative contracts Pension and postretirement benefit plans Total

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Other comprehensive (loss) income, net ( 88 ) 25 10 4 1 1 ( 77 ) 30

Balance at September 30 $ ( 678 ) $ ( 748 ) $ 20 $ ( 2 ) $ ( 55 ) $ ( 58 ) $ ( 713 ) $ ( 808 )

Balance at March 31 $ ( 629 ) $ ( 571 ) $ 17 $ ( 5 ) $ ( 55 ) $ ( 55 ) $ ( 667 ) $ ( 631 )

Amounts reclassified from Accumulated other comprehensive loss are recognized in "Other income, net" with the tax impact recognized in "Income tax expense" on the Condensed Consolidated Statements of Income.

Supply Chain Financing Program The Company has entered into supply chain financing arrangements with third-party financial institutions to provide our vendors with enhanced payment options while providing the Company with added working capital flexibility.

Suppliers utilized the program to accelerate receipt of payment from these financial institutions for $ 317 million and $ 305 million of the Company's outstanding Accounts payable as of March 31, 2024 and December 31, 2023, respectively.

The supplier invoices included under the program require payment in full to the financial institutions consistent with the Company’s normal terms and conditions as agreed upon with the vendor.

On December 22, 2023, the Company purchased the remaining ownership shares of Lokomotiv Kurastyru Zauyty ("LKZ"), a locomotive manufacturing and assembly company located in Kazakhstan, at which time it became a wholly owned subsidiary of the Company.

Prior to this purchase, Wabtec owned 50 % of LKZ as a joint venture partner and accounted for its ownership interest as an equity method investment.

Total purchase price for the remaining 50 % interest was $ 111 million.

Upon acquisition, Wabtec's previously held equity interest balance was remeasured to fair value and the Company ceased accounting for the investment using the equity method and recognized 100 % of LKZ's identifiable assets and liabilities.

LKZ's results of operations and cash flows have been fully consolidated subsequent to the acquisition date.

The following table summarizes the fair value of 100 % of the LKZ assets acquired and liabilities assumed:

Assets acquired

Cash and cash equivalents $ 30

Accounts receivable 6

Property, plant and equipment 36

Other noncurrent assets 3

Total assets acquired 281

Liabilities assumed

Current liabilities 21

Noncurrent liabilities 3

Total liabilities assumed 24

Net assets acquired $ 257

The fair values of the assets acquired and liabilities assumed were determined using the income, cost and market approaches.

These estimates are preliminary in nature and subject to adjustments, which could be material as the Company has not completed its valuation of acquired assets and liabilities.

Any necessary adjustments will be finalized within one year from the date of acquisition.

Goodwill was calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of the net assets acquired and represents the assembled workforce and the future economic benefits of expanding our global operations expected to be achieved as a result of the acquisition.

The purchased goodwill is not expected to be deductible for tax purposes.

The results of this business since the date of acquisition are reported within the Equipment product line of the Freight Segment.

The pro forma impact on Wabtec’s sales and results of operations, including the pro forma effect of events that are directly attributable to the acquisition, was not significant.

During the second quarter of 2023, the Company acquired L&M Radiator, Inc., a leading manufacturer of heavy-duty equipment radiators and heat exchangers for the mining sector, for a purchase price of approximately $ 245 million.

The following table summarizes the preliminary fair value of the L&M Radiator, Inc.

The following table summarizes the fair value of the L&M Radiator, Inc.

assets acquired and liabilities assumed:

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Intangible assets acquired include customer relationships and acquired technology that are subject to amortization, and trade names that were assigned an indefinite life and are not subject to amortization.

Contingent liabilities assumed as part of the transaction were not material.

Contingent liabilities assumed as part of the transaction are preliminary and subject to change.

These estimates are preliminary in nature and subject to adjustments, which could be material as the Company has not completed its valuation of acquired assets and liabilities.

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Goodwill was calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of the net assets acquired, and represents the assembled workforce and the future economic benefits, including synergies, that are expected to be achieved as a result of the acquisition.

The purchased goodwill is no t expected to be

deductible for tax purposes.

The purchased goodwill is no t expected to be deductible for tax purposes.

The results of this business since the date of acquisition are reported within the Components product line of the Freight Segment.

The pro forma impact on Wabtec’s sales and results of operations, including the pro forma effect of events that are directly attributable to the acquisition, was not significant.

During the twelve months ended December 31, 2022, the Freight Segment made three strategic acquisitions for a combined purchase price of $ 89 million.

Two of the acquisitions are reported in the Digital Intelligence product line and one is reported in the Services product line.

Each of the acquisitions in 2022 are individually and collectively immaterial.

The components of inventory, net of reserves, were:

In millions September 30,

In millions March 31,

2024 December 31,

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Foreign currency impact ( 14 ) ( 35 ) ( 49 )

Balance at September 30, 2023 $ 7,186 $ 1,404 $ 8,590

As of September 30, 2023 and December 31, 2022, the Company’s trade names had a net carrying amount of $ 612 million and $ 602 million, respectively.

The Company believes these intangibles have indefinite lives, with the exception of the right to use the GE Transportation trade name, to which the Company has assigned a useful life of 5 years.

Balance at March 31, 2024 $ 7,279 $ 1,451 $ 8,730

As of March 31, 2024 and December 31, 2023, the Company’s trade names had a net carrying amount of $ 600 million and $ 612 million, respectively.

The Company believes these intangibles have indefinite lives, with the exception of the right to use the GE Transportation trade name, to which the Company had assigned a useful life of 5 years.

As of March 31, 2024, the GE Transportation trade name has been fully amortized.

Intangible assets of the Company, other than goodwill and trade names, consist of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

In millions Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

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Total $ 4,037 $ ( 1,522 ) $ 2,515 $ 4,047 $ ( 1,454 ) $ 2,593

At September 30, 2023 the weighted average remaining useful lives of backlog, customer relationships and acquired technology were 9 years, 16 years and 7 years, respectively.

At March 31, 2024 the weighted average remaining useful lives of backlog, customer relationships and acquired technology were 8 years, 15 years and 7 years, respectively.

The backlog intangible asset primarily consists of in-place long-term service agreements acquired by the Company in conjunction with the acquisition of GE Transportation.

Amortization expense for intangible assets was $ 74 million and $ 222 million for the three and nine months ended September 30, 2023, respectively, and $ 73 million and $ 218 million for the three and nine months ended September 30, 2022, respectively.

Amortization expense for intangible assets was $ 74 million and $ 75 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense for the five succeeding years is estimated to be as follows:

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The current portion of the contract assets are classified as current assets under the caption “Unbilled accounts receivable” while the noncurrent contract assets are classified as other assets under the caption "Other noncurrent assets" on the Condensed Consolidated Balance Sheets.

Noncurrent contract assets were $ 196 million at September 30, 2023 and $ 162 million at December 31, 2022.

Included in noncurrent contract assets are certain costs that are specifically related to a contract but do not directly contribute to the transfer of control of the tangible product being created, such as non-recurring engineering costs.

Noncurrent contract assets were $ 163 million at March 31, 2024 and $ 154 million at December 31, 2023.

The Company has elected to use the practical expedient and does not consider unbilled amounts anticipated to be paid within one year as significant financing components.

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The current portion of contract liabilities are classified as current liabilities under the caption “Customer deposits” while the noncurrent contract liabilities are classified as noncurrent liabilities under the caption "Other long-term liabilities" on the Condensed Consolidated Balance Sheets.

Noncurrent contract liabilities were $ 200 million at September 30, 2023 and $ 86 million at December 31, 2022.

Noncurrent contract liabilities were $ 179 million at March 31, 2024 and $ 174 million at December 31, 2023.

These contract liabilities are not considered a significant financing component because they are used to meet working capital demands that can be higher in the early stages of a contract or revenue associated with the contract liabilities is expected to be recognized within one year.

Contract liabilities also include provisions for estimated losses from uncompleted contracts.

Provisions for loss contracts were $ 90 million and $ 98 million at September 30, 2023 and December 31, 2022, respectively.

Provisions for loss contracts were $ 98 million and $ 104 million at March 31, 2024 and December 31, 2023, respectively.

These provisions for estimated losses are classified as current liabilities and included within the caption “Other accrued liabilities” on the Condensed Consolidated Balance Sheets.

The change in the carrying amount of contract assets and contract liabilities for the nine months ended September 30, 2023 and 2022 is as follows:

The change in the carrying amount of contract assets and contract liabilities for the three months ended March 31, 2024 and 2023 is as follows:

Contract Assets

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Foreign currency impact — 3

Balance at September 30

Balance at March 31

Contract Liabilities

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Current year amounts reclassified to revenue ( 114 ) ( 70 )

Acquisitions 1 12

Foreign currency impact ( 9 ) 7

Balance at September 30 $ 969 $ 880

Balance at March 31 $ 922 $ 914

The Company leases certain property, buildings and equipment.

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As most of the Company's leases do not provide a readily stated discount rate, the Company must estimate the rate to discount lease payments using its incremental borrowing rate.

Operating lease expense was $ 16 million and $ 48 million for the three and nine months ended September 30, 2023, respectively, and $ 15 million and $ 44 million for the three and nine months ended September 30, 2022, respectively.

New operating leases of $ 7 million and $ 27 million were added during the three and nine months ended September 30, 2023, respectively, and $ 34 million and $ 58 million for the three and nine months ended September 30, 2022, respectively.

Operating lease expense was $ 16 million for each of the three month periods ended March 31, 2024 and 2023.

New operating leases of $ 14 million were added during each of the three month periods ended March 31, 2024 and 2023.

Wabtec does not have material financing leases, short-term or variable leases or sublease income.

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The following table summarizes the remaining lease term and discount rate assumptions used to develop the present value of operating lease liabilities:

September 30,

2024 December 31,

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Long-term debt consisted of the following:

Effective Interest Rate Face Value September 30, 2023 December 31, 2022

Effective Interest Rate Face Value March 31, 2024 December 31, 2023

In millions Book Value Fair Value 1

Book Value Fair Value 1

Restated Credit Agreement:

Revolving Credit Facility 7.2 % $ 25 $ 25 $ 25 $ — $ —

2024 Credit Agreement:

Term Loan 6.9 % $ 225 $ 224 $ 225 $ — $ —

2022 Credit Agreement:

Revolving Credit Facility 8.5 % N/A — — — —

Delayed Draw Term Loan 6.8 % $ 250 250 250 250 250

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3.5 % $ 750 749 717 749 718

3.45 % Senior Notes, due 2026

3.5 % $ 750 749 698 749 699

1.25 % Senior Notes (EUR), due 2027

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4.8 % $ 1,250 1,245 1,230 1,245 1,237

5.611 % Senior Notes, due 2034

5.7 % $ 500 495 507 — —

Other Borrowings 2 4 54 57

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Additionally, the Company has debt issuance costs related to certain financing transactions which are also amortized through interest expense.

As of September 30, 2023 and December 31, 2022, the Company had total combined unamortized discount and debt issuance costs of $ 16 million and $ 21 million, respectively.

As of March 31, 2024 and December 31, 2023, the Company had total combined unamortized discount and debt issuance costs of $ 19 million and $ 15 million, respectively.

Credit Agreements

2024 Credit Agreement

On June 8, 2018, the Company entered into a credit agreement (“Original Credit Agreement”) consisting of (i) term loans denominated in euros and U.S.

dollars ("Term Loans") and (ii) a multi-currency revolving loan facility, providing for an equivalent in U.S.

dollars of up to $ 1.2 billion.

On August 15, 2022, the Company entered into a new unsecured credit agreement ("Restated Credit Agreement"), which amended, restated and replaced the Original Credit Agreement.

The Restated Credit Agreement is with a syndicate of lenders and provides for borrowings consisting of (i) a multi-currency revolving credit facility, providing for an equivalent in U.S.

dollars of up to $ 1.5 billion (the “Revolving Credit Facility”) and (ii) a new $ 250 million delayed draw term loan facility (the “Delayed Draw Term Loan”), all pursuant to the terms and conditions of the Restated Credit Agreement (which are substantially similar with the terms of the Original Credit Agreement).

The Restated Credit Agreement allows the Company to request, at prevailing market rates, an aggregate amount not to exceed $ 750 million, (a) increases to the borrowing commitments under the Revolving Credit Facility and/or (b) new incremental term loan commitments.

On March 14, 2024, the Company entered into a new stand-alone credit agreement (the "2024 Credit Agreement") for a term loan of $ 225 million.

Borrowings under the 2024 Credit Agreement bear interest at a base rate plus an interest rate spread up to 1.75 % based on the lower of the pricing corresponding to (i) the Company’s Leverage Ratio or (ii) the Company’s public rating.

The frequency of interest payments varies based upon the Interest Election Request.

The term loan issued under the 2024 Credit Agreement will mature on March 14, 2029.

The obligations of the Company under the 2024 Credit Agreement are unsecured and have been guaranteed by certain of the Company’s subsidiari es.

The agreement contains affirmative, negative and financial covenants, and events of default customary for facilities of this type.

The borrowing rate for the 2024 Credit Agreement is a variable rate assessed periodically in accordance with the terms of the 2024 Credit Agreement.

At March 31, 2024, the interest rate was 6.8 %.

Under the 2024 Credit Agreement, the Company has agreed to maintain an Interest Coverage Ratio of at least 3.0 to 1.0, and a Leverage Ratio not to exceed 3.5 to 1.0.

The Interest Coverage Ratio is defined as EBITDA (earnings before interest, taxes, depreciation, and amortization) to Interest Expense for the four quarters then ended.

The Leverage Ratio is defined as Net Debt as of the last day of such fiscal quarter to EBITDA for the four quarters then ended.

Additionally, the Company may submit a request for an increased maximum Leverage Ratio in contemplation of a Material Acquisition.

All terms are as defined in the 2024 Credit Agreement.

2022 Credit Agreement

On August 15, 2022, the Company entered into a new unsecured credit agreement (the "2022 Credit Agreement").

The 2022 Credit Agreement is with a syndicate of lenders and provides for borrowings consisting of (i) a multi-currency revolving credit facility, providing for an equivalent in U.S.

dollars of up to $ 1.5 billion (the “Revolving Credit Facility”) and (ii) a new

$ 250 million delayed draw term loan facility (the “Delayed Draw Term Loan”), all pursuant to the terms and conditions of the 2022 Credit Agreement.

The 2022 Credit Agreement allows the Company to request, at prevailing market rates, an aggregate amount not to exceed $ 750 million, (a) increases to the borrowing commitments under the Revolving Credit Facility and/or (b) new incremental term loan commitments.

The agreement contains affirmative, negative and financial covenants, and events of default customary for facilities of this type.

The Revolving Credit Facility matures on August 15, 2027.

The Delayed Draw Term Loan is available for borrowings until February 15, 2024 and any borrowings under the Delayed Draw Term Loan will mature on August 15, 2027.

The Delayed Draw Term Loan was available for borrowings until February 15, 2024, and was fully drawn during the third quarter of 2023.

Borrowings under the Delayed Draw Term Loan will mature on August 15, 2027.

Amounts borrowed and repaid under the Delayed Draw Term Loan may not be reborrowed.

The applicable interest rate for borrowings under the Restated Credit Agreement includes a base rate (per the Interest Election terms of the agreement) plus an interest rate spread up to 1.75 % based on the lower of the pricing corresponding to (i) the Company’s financial leverage or (ii) the Company’s public rating.

The applicable interest rate for borrowings under the 2022 Credit Agreement includes a base rate (per the Interest Election terms of the agreement) plus an interest rate spread up to 1.75 % based on the lower of the pricing corresponding to (i) the Company’s financial leverage or (ii) the Company’s public rating.

Obligations under the Restated Credit Agreement have been guaranteed by certain of the Company’s subsidiaries.

During the third quarter of 2023, the Company borrowed the full $ 250 million of availability from the Delayed Draw Term Loan and utilized the proceeds to redeem the 4.375 % Senior Notes, due 2023.

The borrowing rate for the Delayed Draw Term Loan is a variable rate reassessed periodically in accordance with the terms of the Restated Credit Agreement.

Under the Restated Credit Agreement, the Company has agreed to maintain an Interest Coverage Ratio of at least 3.0 to 1.0, and a Leverage Ratio not to exceed 3.5 to 1.0.

The borrowing rate for the Delayed Draw Term Loan is a variable rate reassessed periodically in accordance with the terms of the 2022 Credit Agreement.

At March 31, 2024, the interest rate was 6.8 %.

Under the 2022 Credit Agreement, the Company has agreed to maintain an Interest Coverage Ratio of at least 3.0 to 1.0, and a Leverage Ratio not to exceed 3.5 to 1.0.

The Interest Coverage Ratio is defined as EBITDA (earnings before interest, taxes, depreciation, and amortization) to Interest Expense for the four quarters then ended.

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Additionally, the Company may submit a request for an increased maximum Leverage Ratio in contemplation of a Material Acquisition.

All terms are as defined in the Restated Credit Agreement.

The Company was in compliance with all financial covenants in the Restated Credit Agreement as of September 30, 2023.

The following table presents availability under the Restated Credit Agreement at September 30, 2023:

All terms are as defined in the 2022 Credit Agreement.

The following table presents availability under the 2022 Credit Agreement at March 31, 2024:

In millions Revolving Credit Facility Delayed Draw Term Loan Total

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Current Availability $ 1,499 $ — $ 1,499

The Company was in compliance with all financial covenants in the 2022 Credit Agreement and the 2024 Credit Agreement as of March 31, 2024.

The Company or its subsidiaries may issue senior notes from time to time.

These notes are comprised of our 4.375 % Senior Notes due 2023 (the "2023 Notes"), 4.15 % Senior Notes due 2024 (the "2024 Notes"), 3.20 % Senior Notes due 2025 (the "2025 Notes"), 3.45 % Senior Notes due 2026 (the "2026 Notes"), 1.25 % Senior Notes (EUR) due 2027 (the "Euro Notes"), and 4.70 % Senior Notes due 2028 (the "2028 Notes").

These notes are comprised of our 4.15 % Senior Notes due 2024 (the "2024 Notes"), 3.20 % Senior Notes due 2025 (the "2025 Notes"), 3.45 % Senior Notes due 2026 (the "2026 Notes"), 1.25 % Senior Notes (EUR) due 2027 (the "Euro Notes"), 4.70 % Senior Notes due 2028 (the "2028 Notes"), and 5.611 % Senior Notes due 2034 (the "2034 Notes").

The 2024 Notes, 2025 Notes, 2026 Notes, 2028 Notes, and 2034 Notes are the “US Notes”, and collectively with the Euro Notes, the “Senior Notes.” Interest on the US Notes is payable semi-annually and interest on the Euro Notes is paid annually.

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The US Notes and the Company's guarantee of the Euro Notes are senior unsecured obligations of the Company and rank pari passu with all existing and future senior debt, and are senior to all existing and future subordinated indebtedness of the Company.

On March 11, 2024, the Company issued $ 500 million of 5.611 % Senior Notes due in 2034 (2034 Notes).

The 2034 Notes were issued at 100 % of face value and the Company recognized approximately $ 5 million of total deferred financing costs.

Interest on the 2034 Notes will accrue at a rate of 5.611 % per year, payable semi-annually on March 11 and September 11 of each year, commencing September 11, 2024.

The 2034 Notes will mature on March 11, 2034.

Proceeds from the 2034 Notes, combined with the proceeds from the term loan under the 2024 Credit Agreement and cash on hand, were utilized to redeem the outstanding amount of 2024 Notes.

Beginning September 15, 2023, the effective interest rates for the 2024 Notes and the 2028 Notes were each reduced by 0.25 % due to a favorable change in Wabtec's corporate credit rating and the rating of the aforementioned notes.

During the second quarter of 2022, the Company redeemed $ 25 million of principal from the 2024 Notes plus a premium and the related accrued interest.

The indentures under which the Senior Notes were issued contain covenants and restrictions which limit, subject to certain exceptions, certain sale and leaseback transactions with respect to principal properties, the incurrence of secured debt without equally and ratably securing the Senior Notes, and certain merger and consolidation transactions.

The covenants do not require the Company to maintain any financial ratios or specified levels of net worth or liquidity.

The US Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by each of the Company's subsidiaries that is a guarantor under the Restated Credit Agreement.

The US Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by each of the Company's subsidiaries that is a guarantor under the 2022 Credit Agreement and the 2024 Credit Agreement.

The Euro Notes were issued by Wabtec Transportation Netherlands B.V.

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The Company maintains employee stock-based compensation plans for stock options, restricted stock, and incentive stock units as governed by the 2011 Stock Incentive Compensation Plan, as amended and restated (the “2011 Plan”) and the 2000 Stock Incentive Plan, as amended (the “2000 Plan”).

The 2011 Plan has a term through May 10, 2027, and as of September 30, 2023, the number of shares available for future grants under the 2011 Plan was approximately 4.9 million shares.

The 2011 Plan has a term through May 10, 2027, and as of March 31, 2024, the number of shares available for future grants under the 2011 Plan was approximately 4.4 million shares.

The Company also maintains a 1995 Non-Employee Directors’ Fee and Stock Option Plan as amended and restated (“the Directors Plan”).

Stock-based compensation expense was $ 16 million and $ 42 million for the three and nine months ended September 30, 2023, respectively, and $ 12 million and $ 35 million for the three and nine months ended September 30, 2022, respectively.

September 30, 2023, unamortized compensation expense related to stock options, non-vested restricted shares and incentive stock units expected to vest is approximately $ 66 million.

Stock Options Stock options are granted to eligible employees and directors at an exercise price equal to fair market value, which is the average of the high and low Wabtec stock price on the date of grant.

Under the 2011 Plan and the 2000 Plan, options become exercisable over a three-year vesting period and expire 10 years from the date of grant.

No stock options were granted during the nine months ended September 30, 2023 or the twelve months ended December 31, 2022.

The following table summarizes the Company’s stock option activity and related information for the 2011 Plan, the 2000 Plan and the Directors Plan for the nine months ended September 30, 2023:

Options Weighted

Price Weighted

Contractual Life Aggregate

Intrinsic value

(in millions)

Outstanding at December 31, 2022 399,938 $ 77.32 5.9 $ 11

Exercised ( 73,380 ) $ 74.34

Canceled ( 1,751 ) $ 79.50

Outstanding at September 30, 2023 324,807 $ 78.28 5.5 $ 9

Exercisable at September 30, 2023 289,263 $ 77.95 5.5 $ 8

Stock-based compensation expense was $ 17 million and $ 12 million for the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, unamortized compensation expense related to stock options, non-vested restricted shares and incentive stock units expected to vest is approximately $ 109 million.

Stock Options Stock options can be granted to eligible employees and directors at an exercise price equal to fair market value, which is the average of the high and low Wabtec stock price on the date of grant.

Options become exercisable over a three-year vesting period and expire 10 years from the date of grant.

There were no stock options granted in the periods presented.

At March 31, 2024, there were 273,210 shares exercisable.

Restricted Stock, Restricted Stock Units and Incentive Stock As provided for under the 2011 Plan and 2000 Plan, eligible employees are granted restricted stock that generally vests over three years from the date of grant.

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The restricted stock units are liability-classified equity awards as they can be settled in cash.

In addition, the Company has issued incentive stock units to eligible employees that vest upon attainment of certain cumulative three-year performance goals.

In addition, the Company has issued incentive stock units to eligible employees that vest upon attainment of certain cumulative three-year performance goals, including a Relative Total Stockholder Return ("RTSR") modifier.

The RTSR modifier can increase or decrease the payment by 10%.

Significant judgments and estimates are used in determining the estimated three-year performance, which is then used to estimate the total shares expected to vest over the three year vesting cycle and corresponding expense based on the grant date fair value of the award.

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The incentive stock units included in the table below represent the number of incentive stock units that are expected to vest based on the Company’s estimate for meeting those established performance targets.

As of September 30, 2023, the Company estimates that it will achieve 129 %, 129 % and 107 % for the incentive stock awards expected to vest based on performance for the three-year periods ending December 31, 2023, 2024, and 2025, respectively, and has recorded incentive compensation expense accordingly.

As of March 31, 2024, the Company estimates that it will achieve 153 %, 136 % and 100 % for the incentive stock awards expected to vest, inclusive of the RTSR modifier, based on the estimated performance for the three-year periods ending December 31, 2024, 2025, and 2026, respectively, and has recorded incentive compensation expense accordingly.

If the estimates of the number of these incentive stock units expected to vest changes in a future accounting period, cumulative compensation expense could increase or decrease and will be recognized in the current period for the elapsed portion of the vesting period and would change future expense for the remaining vesting period.

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Expense for incentive stock units is updated as necessary based on the Company's performance.

The following table summarizes the restricted stock activity and related information for the 2011 Plan, the 2000 Plan, and Directors Plan, and incentive stock units activity and related information for the 2011 Plan and the 2000 Plan with related information for the nine months ended September 30, 2023:

The following table summarizes the restricted stock, restricted stock unit and incentive stock unit activity and related information for the three months ended March 31, 2024:

and Units Incentive

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Canceled ( 15,940 ) ( 1,484 ) $ 84.06

Outstanding at September 30, 2023 779,571 697,486 $ 93.48

The overall effective tax rate for the three and nine months ended September 30, 2023 was 24.5 % and 25.1 %, respectively.

These rates differ from the U.S.

federal statutory rate of 21.0% primarily due to the impact of state and foreign taxes.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law.

This act includes a new book minimum tax on certain large corporations and an excise tax on corporate stock buybacks among other provisions.

This act has not had, and is not expected to have, a material impact on our consolidated financial position, results of operations, or cash flows.

Outstanding at March 31, 2024 787,238 649,506 $ 111.68

The overall effective tax rate for the three months ended March 31, 2024 and 2023 was 23.6 % and 25.5 %, respectively.

The year over year decrease was primarily driven by higher discrete equity compensation tax deductions for the three months ended March 31, 2024.

EARNINGS PER SHARE

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Three Months Ended

September 30, Nine Months Ended

September 30,

In millions, except per share data 2024 2023

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Diluted $ 1.53 $ 0.93

The following table reconciles the changes in the Company’s product warranty reserve for the nine months ended September 30, 2023 and 2022:

The following table reconciles the changes in the Company’s product warranty reserve for the three months ended March 31, 2024 and 2023:

In millions 2024 2023

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Warranty claim payments ( 25 ) ( 21 )

Acquisitions — 3

Foreign currency impact/other ( 2 ) 1

Balance at September 30

Balance at March 31

FAIR VALUE MEASUREMENT AND DERIVATIVE INSTRUMENTS

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The Company’s cash, cash equivalents and restricted cash are highly liquid investments purchased with an original maturity of three months or less and are considered Level 1 on the fair value valuation hierarchy.

The fair value of cash, cash equivalents and restricted cash approximated the carrying value at September 30, 2023 and December 31, 2022.

The fair value of cash, cash equivalents and restricted cash approximated the carrying value at March 31, 2024 and December 31, 2023.

The Senior Notes are considered Level 2 based on the fair value valuation hierarchy.

Contingent consideration related to the GE Transportation acquisition is considered Level 3 based on the fair value valuation hierarchy.

At September 30, 2023 and December 31, 2022, $ 105 million was classified as "Other accrued liabilities" on the Company's Condensed Consolidated Balance Sheets and $ 49 million and $ 47 million, respectively, was included within long-term liabilities classified as "Contingent consideration" on the Company's Condensed Consolidated Balance Sheets.

The fair value approximates the carrying value at September 30, 2023 and December 31, 2022.

At March 31, 2024 and December 31, 2023, $ 42 million was classified as "Other accrued liabilities" on the Company's Condensed Consolidated Balance Sheets.

The fair value approximates the carrying value at March 31, 2024 and December 31, 2023.

Hedging Activities In the normal course of business, the Company is exposed to market risk related to interest rates, commodity prices and foreign currency exchange rate fluctuations, which may adversely affect our operating results and financial position.

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The effective portion of gains and losses is deferred as a component of Accumulated other comprehensive loss and is recognized in earnings at the time the hedged item affects earnings, in the same line item as the underlying hedged item.

For the three and nine months ended September 30, 2023 and 2022, the amounts reclassified into income were not material.

For the three months ended March 31, 2024 and 2023, the amounts reclassified into income were not material.

The Company has also established balance sheet risk management and net investment hedging programs to protect its balance sheet against foreign currency exchange rate volatility.

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These foreign exchange contracts are accounted for on a full mark to market basis through earnings, with gains and losses recorded as a component of Other income, net.

The net gain related to these contracts was $ 9 million and $ 11 million for the three and nine months ended September 30, 2023, and the net loss related to these contracts was $ 3 million and $ 11 million for the three and nine months ended September 30, 2022, respectively.

The net gains and losses related to these contracts were not material for the three months ended March 31, 2024 and 2023.

These contracts typically mature within one year .

The following table summarizes the assets, liabilities, gross notional amounts, fair values, and fair value hierarchy classification of the designated and non-designated hedges discussed in the above sections as of September 30, 2023, which are included in other current assets and liabilities on the Condensed Consolidated Balance Sheets:

Interest Rate Risk

The Company may use interest rate hedge contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to manage its overall cost of borrowing.

The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal capital at risk.

During the first quarter of

2024, the Company utilized all outstanding interest rate hedge contracts to help manage interest expense for the 2034 Notes.

F or the three months ended March 31, 2024 and 2023, the amounts reclassified into income were not material.

Commodity Price Risk

The Company may use commodity forward swaps to manage its exposure to commodity price changes and to reduce its overall cost of manufacturing.

For the three months ended March 31, 2024 and 2023, the amounts recognized as income or expense were not material.

The following table summarizes the assets, liabilities, gross notional amounts, fair values, and fair value hierarchy classification of the designated and non-designated hedges discussed in the above sections as of March 31, 2024, which are included in other current assets and liabilities on the Condensed Consolidated Balance Sheets:

Fair Value Gross Notional Amount

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Other current liabilities 2 ( 6 ) ( 1 ) 255 122

Interest Rate Contracts

Other current assets 2 23 — 250 —

Total $ — $ ( 1 ) $ 758 $ 241

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Other current liabilities 2 ( 12 ) ( 3 ) 655 200

Interest Rate Contracts

Other current assets 2 10 — 250 —

Total $ 4 $ — $ 1,224 $ 310

Interest Rate Risk

The Company may use interest rate hedge contracts on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to manage its overall cost of borrowing.

Accordingly, the Company has entered into interest rate hedges to manage interest rate risk for a portion of future expected debt transactions.

The Company does not use leveraged swaps and, in general, does not leverage any of its investment activities that would put principal capital at risk.

For the nine months ended September 30, 2023 and 2022 the amounts reclassified into income were not material.

Commodity Price Risk

The Company may use commodity forward swaps to manage its exposure to commodity price changes and to reduce its overall cost of manufacturing.

For the nine months ended September 30, 2023 and 2022 the amounts recognized as income or expense were not material.

COMMITMENTS AND CONTINGENCIES

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During the third quarter of 2023, a competitor of the Company, Progress Rail (“Progress”), which is a Caterpillar Inc.

company, sued the Company in Delaware federal court asserting antitrust, breach of contract, unfair competition law, and misrepresentation claims.

company, sued the Company in the U.S.

District Court for the District of Delaware asserting antitrust, breach of contract, unfair competition law, and misrepresentation claims.

The complaint challenges the Wabtec-GE Transportation merger and contends that since the merger, Wabtec has unlawfully monopolized the markets for long-haul freight locomotives, Tier IV long-haul freight locomotives, and energy management systems by, among other things, failing to ensure that Progress’ products are interoperable with Wabtec’s locomotives and cab electronics.

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Progress seeks an order requiring Wabtec to divest GE Transportation, unspecified treble damages for its alleged lost profits from reduced sales of locomotive and cab systems, and attorneys’ fees and costs.

It also asks the court to enjoin Wabtec from engaging in the conduct and require the Company to comply with its agreements with Progress.

It also asks the court to enjoin Wabtec from engaging in the conduct

and require the Company to comply with its agreements with Progress.

Wabtec intends to vigorously defend itself against this lawsuit and believes that it has meritorious defenses to the claims asserted by Progress.

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With regard to the wireless crossing issue, as of September 8, 2017, DTC alleged that total damages were $ 37 million through July 31, 2017 and were continuing to accumulate.

all of the crossings pending approval of the wireless crossing system and certification of the crossings.

The majority of the damages stems from a delay in approval of the wireless crossing system by the Federal Railway Administration ("FRA") and the Public Utility Commission ("PUC"), resulting in the use of flaggers at all of the crossings pending approval of the wireless crossing system and certification of the crossings.

DTC has alleged that the delay is due to Xorail's failure to achieve constant warning times for the crossings in accordance with the approval requirements imposed by the FRA and PUC.

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Corporate activities include general corporate expenses, elimination of intersegment transactions, interest income and expense, and other unallocated charges.

Segment financial information for the three months ended September 30, 2023 is as follows:

During the first quarter of 2024, Company management determined that certain parts of the business would be better aligned with management oversight in different product lines.

These changes were immaterial to the individual product lines and segments affected, and historical amounts have been reclassified to conform to the current period presentation.

Segment financial information for the three months ended March 31, 2024 is as follows:

In millions Freight

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Income (loss) before income taxes $ 368 $ 74 $ ( 79 ) $ 363

Segment financial information for the three months ended September 30, 2022 is as follows:

Segment financial information for the three months ended March 31, 2023 is as follows:

In millions Freight

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Income (loss) before income taxes $ 226 $ 70 $ ( 63 ) $ 233

Segment financial information for the nine months ended September 30, 2023 is as follows:

In millions Freight Segment Transit Segment Corporate Activities and Elimination Total

Sales to external customers $ 5,164 $ 1,987 $ — $ 7,151

Intersegment sales/(elimination) 48 31 ( 79 ) —

Total sales $ 5,212 $ 2,018 $ ( 79 ) $ 7,151

Income (loss) from operations $ 825 $ 203 $ ( 70 ) $ 958

Interest expense and other, net — — ( 146 ) ( 146 )

Income (loss) before income taxes $ 825 $ 203 $ ( 216 ) $ 812

Segment financial information for the nine months ended September 30, 2022 is as follows:

In millions Freight Segment Transit Segment Corporate Activities and Elimination Total

Sales to external customers $ 4,343 $ 1,713 $ — $ 6,056

Intersegment sales/(elimination) 38 24 ( 62 ) —

Total sales $ 4,381 $ 1,737 $ ( 62 ) $ 6,056

Income (loss) from operations $ 655 $ 168 $ ( 59 ) $ 764

Interest expense and other, net — — ( 120 ) ( 120 )

Income (loss) before income taxes $ 655 $ 168 $ ( 179 ) $ 644

Sales to external customers by product line are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

In millions 2024 2023

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Total Transit Segment $ 673 $ 638

OTHER INCOME, NET

The components of Other income, net are as follows:

OTHER (EXPENSE) INCOME, NET

The components of Other (expense) income, net are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

In millions 2024 2023

Foreign currency loss $ ( 3 ) $ ( 6 ) $ ( 9 ) $ ( 5 )

Foreign currency (loss) gain ( 4 ) $ 2

Equity income 1 1

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Other miscellaneous (expense) income, net ( 1 ) —

Total Other income, net $ 10 $ 4 $ 17 $ 15

Total Other (expense) income, net $ ( 2 ) $ 5

RESTRUCTURING

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A summary of restructuring charges related to the Integration 2.0 initiative is as follows:

In millions Three Months Ended

September 30, 2023 Nine Months Ended

September 30, 2023

Three Months Ended

In millions 2024 2023

Freight Segment:

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Total one-time restructuring charges related to Integration 2.0 to date are approximately $ 126 million, which includes amounts recorded beginning in the fourth quarter 2021, and are primarily for employee-related costs and asset write downs associated with site consolidations in Europe.

Programs approved to date are expected to result in approximately 15 facility closures and impact approximately 1,100 employees.

Cash payments made during three and nine months ended September 30, 2023 or 2022 were no t material.

No significant programs related to Integration 2.0 were initiated during the three and nine months ended September 30, 2022.

Cash payments made during the three months ended March 31, 2024 were approximately $ 22 million.

Cash payments made during the three months ended March 31, 2023 were no t material.

In addition to Integration 2.0, Wabtec is focused on exiting various low margin product offerings through Portfolio Optimization to improve profitability while reducing manufacturing complexity.

Wabtec expects to incur approximately $ 85 million in net exit charges related to Portfolio Optimization, which will be predominately non-cash asset write downs.

Wabtec recorded charges of approximately $ 3 million during the three months ended March 31, 2024 for asset write downs related to Portfolio Optimization.

No charges related to Portfolio Optimization were recorded during the three months ended March 31, 2023.

Total one-time restructuring charges related to Portfolio Optimization to date are approximately $ 31 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements