What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-24 compared with 2025-04-23 · 251 added, 98 removed, 234 unchanged (60% of the section changed)

5 unchanged sentences

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 three months of 2025, approximately 51% of the Company’s Net sales came from customers outside the United States.

In the first six months of 2025, approximately half of the Company’s Net sales came from customers outside the United States.

Business Update

During the first quarter of 2025, Wabtec announced definitive agreements to acquire Evident’s Inspection Technologies division (Inspection Technologies), formerly part of the Scientific Solutions Division of Olympus Corporation, for approximately $1.78 billion, and Dellner Couplers for approximately $960 million.

On July 1, 2025, Wabtec completed the previously announced acquisition of Evident’s Inspection Technologies division (Inspection Technologies), formerly part of the Scientific Solutions Division of Olympus Corporation, for approximately $1.78 billion.

Inspection Technologies is a global leader in Non-Destructive Testing, Remote Visual Inspection and Analytical Instruments solutions for mission critical assets.

Inspection Technologies' industry presence and innovative product portfolio will significantly expand Wabtec's capabilities and complement the existing product portfolio of Digital Intelligence.

On July 7, 2025, the Company announced a definitive agreement to acquire Frauscher Sensor Technology Group, GmbH ("Frauscher"), a global market leader in train detection, wayside object control solutions and axle counting systems, for approximately € 675 million.

The acquisition positions Wabtec for accelerated, profitable growth, and further strengthens the Company’s Digital Intelligence business by adding highly attractive and complementary railway signaling technologies.

Additionally, during the first quarter of 2025, Wabtec announced a definitive agreement to acquire Dellner Couplers for approximately € 890 million.

Dellner Couplers is a global leader in highly engineered safety-critical train connection systems and services for passenger rail rolling stock.

The acquisition brings highly attractive and complementary technologies to the Transit business and provides synergies by complementing our core transit systems portfolio.

Both acquisitions are subject to customary closing conditions and regulatory approvals.

Transaction costs incurred during the first quarter of 2025 related to these acquisitions were approximately $10 million.

Wabtec is focused on driving operational efficiency and improving profitability while reducing manufacturing complexity.

As a result, there are restructuring initiatives, including Integration 3.0, Portfolio Optimization and Integration 2.0, aimed at achieving these focus areas.

During the first three months of 2025, Wabtec incurred $9 million of restructuring costs related to programs under these initiatives, primarily for employee-related costs.

During the first quarter of 2025, Wabtec signed a $140 million new locomotive order with a North American Class I railroad, signed new locomotive, mining and service orders in the Asia-Pacific region totaling $127 million, signed two multi-year transit platform door contracts valued at $85 million, and secured a $47 million order to provide brakes and couplers for servicing a North American customer.

Both announced acquisitions are subject to customary closing conditions and regulatory approval.

Transaction costs incurred during the three and six months ended June 30, 2025 related to completed and announced acquisitions were approximately $25 million and $35 million, respectively.

During the first six months of 2025, Wabtec signed a $140 million new locomotive order with a North American Class I railroad, signed new locomotive, mining and service orders in the Asia-Pacific region totaling $127 million, signed two multi-year transit platform door contracts valued at $85 million, and secured a $47 million order to provide brakes and couplers for servicing a North American customer.

Wabtec also continued to drive recurring revenue in the global market by winning a new service contract in Kazakhstan worth $299 million.

Additionally, in March of 2025, Moody's upgraded the Senior Notes ratings to Baa2 from Baa3 and changed the outlook to stable from positive, and S&P Global Ratings reaffirmed Wabtec's credit rating at BBB with a Stable outlook.

Wabtec is focused on driving operational efficiency and improving profitability while reducing manufacturing complexity.

As a result, there are restructuring initiatives, including Integration 3.0, Portfolio Optimization and Integration 2.0, aimed at achieving these focus areas.

During the first six months of 2025, Wabtec incurred $15 million of restructuring costs related to programs under these initiatives, primarily for employee-related costs.

Future macroeconomic volatility, changes to tariffs and trade policies, supply chain disruptions, and labor availability could cause an impact on revenue and cost increases resulting in an adverse effect on the Company’s operating results.

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Consolidated Results

FIRST QUARTER 2025 COMPARED TO FIRST QUARTER 2024

SECOND QUARTER 2025 COMPARED TO SECOND QUARTER 2024

The following table shows our Condensed Consolidated Statements of Operations for the periods indicated.

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Interest expense, net (46) (49)

Other expense, net (2) (2)

Other income, net 24 4

Income before income taxes 450 385

3 unchanged sentences

Net income attributable to Wabtec shareholders $ 336 $ 289

The following table shows the major components of the change in Net sales in the three months ended March 31, 2025 from the three months ended March 31, 2024:

The following table shows the major components of the change in Net sales in the three months ended June 30, 2025 from the three months ended June 30, 2024:

In millions Freight Segment Transit Segment Total

First Quarter 2024 Net sales $ 1,824 $ 673 $ 2,497

Second Quarter 2024 Net sales $ 1,920 $ 724 $ 2,644

Acquisitions 18 9 27

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Organic (8) 32 24

First Quarter 2025 Net sales $ 1,901 $ 709 $ 2,610

Net sales for the three months ended March 31, 2025 increased by $113 million, or 4.5%, to $2.61 billion compared to the same period in 2024.

Second Quarter 2025 Net sales $ 1,919 $ 787 $ 2,706

Net sales for the three months ended June 30, 2025 increased by $62 million, or 2.3%, to $2.71 billion compared to the same period in 2024.

Organic sales increased $24 million which was attributable to the Transit Segment, partially offset by the Freight Segment.

Transit sales increased from higher demand for Original Equipment Manufacturing and Aftermarket products and services driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased passenger ridership levels.

Freight Components sales decreased primarily due to lower North America rail car build and the exit of low margin business offerings through Portfolio Optimization.

Freight Equipment sales decreased primarily due to lower mining sales and lower locomotive deliveries due to a supplied part issue.

Freight Services sales increased from higher deliveries of locomotive modernizations and higher parts sales.

Sales from acquisitions contributed $27 million, and favorable changes in foreign exchange increased Net sales by $11 million.

Cost of sales

Cost of sales for the three months ended June 30, 2025 decreased by $2 million, or 0.1%, to $1.77 billion compared to the same period in 2024.

Cost of sales as a percentage of Net sales was 65.3% and 67.0% for the three months ended June 30, 2025 and 2024, respectively.

The improvement in gross margin is attributable to favorable mix within the Freight Segment, strong productivity and cost management, Integration 2.0 and 3.0 savings, and the exit of low margin business offerings through Portfolio Optimization.

Costs of sales for the three months ended June 30, 2025 and 2024 included $3 million and $6 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Total operating expenses increased $22 million, or 5.0%, for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to the increase in Net sales and transaction costs associated with announced acquisitions.

Operating expenses as a percentage of sales were 17.2% and 16.8% for the three months ended June 30, 2025 and 2024, respectively.

Selling, general and administrative expenses ("SG&A") increased $31 million for the three months ended June 30, 2025 compared to the same period in 2024.

The increase is primarily from transaction costs associated with announced acquisitions and costs incurred to support the higher sales volume, partially offset by the impacts of Integration 2.0.

Transaction costs associated with announced acquisitions included in SG&A were $25 million for three months ended June 30, 2025.

SG&A for the three months ended June 30, 2025 and 2024 both included $3 million of costs related to restructuring initiatives.

Engineering expenses decreased $7 million due to the timing of investments in new technology.

Interest expense, net

Interest expense, net, decreased $3 million to $46 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to interest income earned on cash balances.

Other income, net

Other income, net increased $20 million to $24 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to a $32 million gain on mark-to-market derivatives in the current period associated with the anticipated acquisition of Dellner Couplers, partially offset by lower equity income and higher foreign exchange losses.

The effective income tax rate was 24.8% and 24.5% for the three months ended June 30, 2025 and 2024, respectively.

The year over year increase in the effective rate was primarily driven by the jurisdictional mix of earnings.

Freight Segment

The following table shows our Condensed Consolidated Statements of Operations for our Freight Segment for the periods indicated:

Three Months Ended

In millions 2025 2024 Change % Change

Sales of goods $ 1,440 $ 1,423 $ 17 1.2 %

Sales of services 479 497 (18) (3.6) %

Total Net sales 1,919 1,920 (1) (0.1) %

Cost of sales:

Cost of goods (936) (972) (36) (3.7) %

Cost of services (286) (279) 7 2.5 %

Total Cost of sales (1,222) (1,251) (29) (2.3) %

Cost of sales (% of Net sales) 63.7 % 65.2 % (1.5)

Gross profit 697 669 28 4.2 %

Operating expenses (282) (278) 4 1.4 %

Income from operations $ 415 $ 391 $ 24 6.1 %

Income from operations (% of Net sales) 21.6 % 20.4 % 1.2

The following table shows the major components of the change in Net sales for the Freight Segment in the second quarter of 2025 from the second quarter of 2024:

Second Quarter 2024 Net sales $ 1,920

Acquisitions 18

Foreign Exchange (11)

Organic changes in Net sales by Product Line:

Components (30)

Equipment (16)

Digital Intelligence (10)

Second Quarter 2025 Net sales $ 1,919

Freight Segment organic sales decreased by $8 million driven primarily by Components sales from lower North America rail car build and the exit of low margin business offerings through Portfolio Optimization and Equipment sales from lower mining sales and lower locomotive deliveries due to a supplied part issue.

This was partially offset by increased Services sales from higher deliveries of locomotive modernizations and higher parts sales.

Sales from acquisitions contributed $18 million, and unfavorable changes in foreign exchange decreased sales by $11 million.

Cost of sales

Freight Segment Cost of sales decreased $29 million, primarily from the exit of low margin business offerings through Portfolio Optimization, and Cost of sales as a percentage of Net sales decreased 1.5 percentage points.

The improvement in gross margin is attributable to favorable mix within the Freight Segment product lines, strong productivity and cost management, and Portfolio Optimization.

Cost of sales for the three months ended June 30, 2025 and 2024 included $2 million and $5 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Freight Segment Operating expenses as a percentage of Net sales were 14.7% and 14.4% for the three months ended June 30, 2025 and 2024, respectively.

Freight Segment Operating expenses increased by $4 million, primarily driven by higher SG&A expenses resulting from acquisitions, partially offset by a reduction in research and development costs and lower amortization expense for intangibles associated with the GE Transportation acquisition.

Transit Segment

The following table shows our Condensed Consolidated Statements of Operations for our Transit Segment for the periods indicated:

Three Months Ended

In millions 2025 2024 Change % Change

Net sales $ 787 $ 724 $ 63 8.7 %

Cost of sales (546) (519) 27 5.2 %

Cost of sales (% of Net sales) 69.3 % 71.7 % (2.4)

Gross profit 241 205 36 17.6 %

Operating expenses (132) (123) 9 7.3 %

Income from operations $ 109 $ 82 $ 27 32.9 %

Income from operations (% of Net sales) 13.9 % 11.3 % 2.6

The following table shows the major components of the change in Net sales for the Transit Segment in the second quarter of 2025 from the second quarter of 2024:

Second Quarter 2024 Net sales $ 724

Acquisitions 9

Foreign Exchange 22

Organic changes in Net sales by Product Line:

Original Equipment Manufacturing 25

Aftermarket 7

Second Quarter 2025 Net sales $ 787

Transit Segment organic sales increased by $32 million driven by strong Original Equipment Manufacturing and Aftermarket sales primarily as a result of increased demand for products and services due to fleet expansion and renewals and increased passenger ridership levels, and increased investments in sustainable infrastructure.

Sales from acquisitions contributed $9 million, and favorable changes in foreign exchange rates increased sales by $22 million.

Cost of sales

Transit Segment Cost of sales increased by $27 million, primarily due to higher sales volume, and Cost of sales as a percentage of Net sales decreased by 2.4 percentage points.

The increase in gross margin was attributable to increased productivity and the benefits from structured cost actions taken through prior years' restructuring and integration projects, primarily Integration 2.0 and 3.0.

Transit Segment Cost of sales for the three months ended June 30, 2025 and 2024 both included $1 million of costs related to restructuring initiatives.

Operating expenses

Transit Segment Operating expenses as a percentage of Net sales were 16.8% and 17.0% for the three months ended June 30, 2025 and 2024, respectively.

Transit Segment Operating expenses increased by $9 million as compared to the prior year.

Higher SG&A expenses to support higher sales volume were partially offset by benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects.

Transit SG&A expenses for the three months ended June 30, 2025 and 2024 included $4 million and $3 million, respectively, of costs related to restructuring initiatives.

FIRST SIX MONTHS OF 2025 COMPARED TO FIRST SIX MONTHS OF 2024

The following table shows our Condensed Consolidated Statements of Operations for the periods indicated.

Six Months Ended

In millions 2025 2024

Sales of goods $ 4,383 $ 4,152

Sales of services 933 989

Total Net sales 5,316 5,141

Cost of sales:

Cost of goods (2,931) (2,901)

Cost of services (547) (551)

Total Cost of sales (3,478) (3,452)

Gross profit 1,838 1,689

Operating expenses:

Selling, general and administrative expenses (654) (597)

Engineering expenses (96) (105)

Amortization expense (142) (145)

Total Operating expenses (892) (847)

Income from operations 946 842

Other income and expenses:

Interest expense, net (92) (96)

Other income, net 22 2

Income before income taxes 876 748

Income tax expense (210) (180)

Net income 666 568

Net income attributable to noncontrolling interest (8) (7)

Net income attributable to Wabtec shareholders $ 658 $ 561

The following table shows the major components of the change in Net sales in the six months ended June 30, 2025 from the six months ended June 30, 2024:

In millions Freight Segment Transit Segment Total

First Six Months of 2024 Net sales $ 3,744 $ 1,397 $ 5,141

Acquisitions 33 17 50

Foreign Exchange (37) 5 (32)

Organic 80 77 157

First Six Months of 2025 Net sales $ 3,820 $ 1,496 $ 5,316

Net sales for the six months ended June 30, 2025 increased by $175 million, or 3.4%, to $5.32 billion compared to the same period in 2024.

Organic sales increased $157 million which was attributable to both the Freight and Transit Segments.

Freight Services sales increased from higher deliveries of locomotive modernizations and engine overhauls and higher parts sales.

Freight Equipment sales decreased primarily due to lower locomotive deliveries.

Transit sales increased from higher demand for Original Equipment Manufacturing and Aftermarket products driven by increased investments in sustainable infrastructure, fleet expansion and renewals and increased passenger ridership levels.

Sales from acquisitions contributed $23 million, and unfavorable changes in foreign exchange decreased Net sales by $43 million.

Freight Equipment sales decreased primarily due to lower locomotive deliveries and lower mining sales.

Sales from acquisitions contributed $50 million, and unfavorable changes in foreign exchange rates decreased Net sales by $32 million.

Cost of sales

Cost of sales for the three months ended March 31, 2025 increased by $28 million, or 1.7%, to $1.71 billion compared to the same period in 2024.

Cost of sales for the six months ended June 30, 2025 increased by $26 million, or 0.8%, to $3.48 billion compared to the same period in 2024.

The increase is primarily due to the increase in Net sales.

Cost of sales as a percentage of Net sales was 65.5% and 67.3% for the three months ended March 31, 2025 and 2024, respectively.

The improvement in gross margin is attributable to favorable mix within the Freight Segment, strong productivity, Integration 2.0 savings, and proactive cost management.

Costs of sales for the three months ended March 31, 2025 and 2024 included $3 million and $6 million, respectively, of costs related to restructuring initiatives.

Cost of sales as a percentage of Net sales was 65.4% and 67.2% for the six months ended June 30, 2025 and 2024, respectively.

Cost of sales for the six months ended June 30, 2025 and 2024 included $6 million and $12 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Total operating expenses increased $23 million, or 5.7%, for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the increase in Net sales, higher employee compensation and benefit costs and transaction costs associated with announced acquisitions.

Operating expenses as a percentage of sales were 16.3% and 16.2% for the three months ended March 31, 2025 and 2024, respectively.

Selling, general and administrative expenses ("SG&A") increased $26 million for the three months ended March 31, 2025 compared to the same period in 2024.

The increase is primarily from costs incurred to support the higher sales volume, partially offset by the impacts of Integration 2.0.

Transaction costs associated with announced acquisitions included in SG&A were $10 million for three months ended March 31, 2025.

SG&A for the three months ended March 31, 2025 and 2024 included $5 million and $3 million, respectively, of costs related to restructuring initiatives.

Total operating expenses increased $45 million, or 5.3%, for the six months ended June 30, 2025 compared to the same period in 2024, primarily due to the increase in Net sales and transaction costs associated with announced acquisitions.

Operating expenses as a percentage of sales were 16.8% and 16.5% for the six months ended June 30, 2025 and 2024, respectively.

SG&A expenses increased $57 million for the six months ended June 30, 2025 compared to the same period in 2024.

The increase is primarily from costs incurred to support the higher sales volume, transaction costs associated with announced acquisitions and higher employee compensation and benefit costs, partially offset by the impacts of Integration 2.0 and 3.0.

Transaction costs associated with announced acquisitions included in SG&A were $35 million for six months ended June 30, 2025.

SG&A for the six months ended June 30, 2025 and 2024 included $8 million and $6 million, respectively, of costs related to restructuring initiatives.

Engineering expenses decreased $9 million due to the timing of investments in new technology.

Interest expense, net

Interest expense, net, decreased $1 million to $46 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to changes in the mix of outstanding debt.

Other expense, net

Other expense, net was $2 million for the three months ended March 31, 2025 and 2024, primarily due to foreign exchange losses, partially offset by equity income.

The effective income tax rate was 23.2% and 23.6% for the three months ended March 31, 2025 and 2024, respectively.

The year over year decrease in the effective rate was driven by higher discrete equity compensation tax deductions and the jurisdictional mix of earnings.

Interest expense, net, decreased $4 million to $92 million for the six months ended June 30, 2025 compared to the same period in 2024, primarily due to interest income earned on cash balances.

Other income, net

Other income, net, increased $20 million to $22 million for the six months ended June 30, 2025 compared to the same period in 2024, primarily due to a $32 million gain on mark-to-market derivatives in the current period associated with the anticipated acquisition of Dellner Couplers, partially offset by lower equity income and higher foreign exchange losses.

The effective income tax rate was 24.0% and 24.1% for the six months ended June 30, 2025 and 2024, respectively.

The year over year decrease in the effective tax rate was primarily driven by the jurisdictional mix of earnings.

Freight Segment

The following table shows our Condensed Consolidated Statements of Operations for our Freight Segment for the periods indicated:

Three Months Ended

Six Months Ended

In millions 2025 2024 Change % Change

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Income from operations (% of Net sales) 21.9 % 20.3 % 1.6

The following table shows the major components of the change in Net sales for the Freight Segment in the first quarter of 2025 from the first quarter of 2024:

First Quarter 2024 Net sales $ 1,824

The following table shows the major components of the change in Net sales for the Freight Segment in the first six months of 2025 from the first six months of 2024:

First Six Months of 2024 Net sales $ 3,744

Acquisitions 33

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Digital Intelligence (3)

First Quarter 2025 Net sales $ 1,901

First Six Months of 2025 Net sales $ 3,820

Freight Segment organic sales increased by $80 million driven primarily by Services sales from higher deliveries of locomotive modernizations and engine overhauls and higher parts sales.

Equipment sales decreased primarily due to lower locomotive deliveries.

Components sales decreased primarily from lower North America rail car build.

This was partially offset by decreased Equipment sales from lower locomotive deliveries and lower mining sales and decreased Components sales from lower North America rail car build and the exit of low margin business offerings through Portfolio Optimization.

Sales from acquisitions contributed $33 million, and unfavorable changes in foreign exchange decreased sales by $37 million.

Cost of sales

Freight Segment Cost of sales increased $17 million from higher sales volume, and Cost of sales as a percentage of Net sales decreased 1.7 percentage points.

The improvement in gross margin is attributable to favorable mix within the Freight Segment product lines, improved productivity and proactive cost management.

Cost of sales for the three months ended March 31, 2025 and 2024 included $2 million and $3 million, respectively, of costs related to restructuring initiatives.

Freight Segment Cost of sales decreased by $12 million, primarily from the exit of low margin business offerings through Portfolio Optimization, partially offset by higher sales volume, and Cost of sales as a percentage of Net sales decreased 1.6 percentage points.

The improvement in gross margin is attributable to favorable mix within the Freight Segment product lines, strong productivity and cost management, Portfolio Optimization, and Integration 2.0 and 3.0.

Cost of sales for the six months ended June 30, 2025 and 2024 included $4 million and $8 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Freight Segment Operating expenses as a percentage of Net sales were 14.0% for the three months ended March 31, 2025 and 2024.

Freight Segment Operating expenses increased by $8 million primarily driven by higher SG&A expenses resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental

expense from acquisitions, partially offset by a reduction in research and development costs and lower amortization expense for intangibles associated with the GE Transportation acquisition.

Freight Segment Operating expenses as a percentage of Net sales were 14.3% for both the six months ended June 30, 2025 and 2024.

Freight Segment Operating expenses increased by $12 million, primarily driven by higher SG&A expenses resulting from higher costs to support increased sales volume, higher employee compensation and benefit costs and incremental expense from acquisitions.

This was partially offset by a reduction in research and development costs and lower amortization expense for intangibles associated with the GE Transportation acquisition.

Transit Segment

The following table shows our Condensed Consolidated Statements of Operations for our Transit Segment for the periods indicated:

Three Months Ended

Six Months Ended

In millions 2025 2024 Change % Change

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Income from operations (% of Net sales) 13.3 % 11.2 % 2.1

The following table shows the major components of the change in Net sales for the Transit Segment in the first quarter of 2025 from the first quarter of 2024:

First Quarter 2024 Net sales $ 673

The following table shows the major components of the change in Net sales for the Transit Segment in the first six months of 2025 from the first six months of 2024:

First Six Months of 2024 Net sales $ 1,397

Acquisitions 17

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Organic changes in Net sales by Product Line:

Aftermarket 29

Original Equipment Manufacturing 41

First Quarter 2025 Net sales $ 709

Transit Segment organic sales increased by $45 million driven by strong Original Equipment Manufacturing and Aftermarket sales primarily as a result of increased demand for products and services and increased investments in sustainable infrastructure.

Sales from acquisitions contributed $8 million, and unfavorable changes in foreign exchange rates decreased sales by $17 million.

Aftermarket 36

First Six Months of 2025 Net sales $ 1,496

Transit Segment organic sales increased by $77 million driven by strong Original Equipment Manufacturing and Aftermarket sales primarily as a result of increased demand for products and services, due to fleet expansion and renewals and increased passenger ridership levels and increased investments in sustainable infrastructure.

Sales from acquisitions contributed $17 million, and favorable changes in foreign exchange rates increased sales by $5 million.

Cost of sales

Transit Segment Cost of sales increased by $11 million, primarily due to higher sales volume, and Cost of sales as a percentage of sales decreased by 2.1 percentage points.

The increase in gross margin was attributable to favorable mix within the Transit Segment, increased productivity and the benefits from structured cost actions taken through prior years' restructuring and integration projects, primarily Integration 2.0.

Transit Segment Cost of sales for the three months ended March 31, 2025 and 2024 included $1 million and $3 million, respectively, of costs related to restructuring initiatives.

Transit Segment Cost of sales increased by $38 million, primarily due to higher sales volume, and Costs of sales as a percentage of Net sales decreased by 2.2 percentage points.

The increase in gross margin is primarily attributable to increased productivity and the benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects.

Transit Cost of sales for the six months ended June 30, 2025 and 2024 included $2 million and $4 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Transit Segment Operating expenses as a percentage of Net sales were 17.6% and 17.2% for the three months ended March 31, 2025 and 2024, respectively.

Transit Segment Operating expenses as a percentage of Net sales were 17.2% and 17.1% for the six months ended June 30, 2025 and 2024, respectively.

Transit Segment Operating expenses increased by $18 million as compared to the prior year.

Higher SG&A expenses to support higher sales volume and higher employee compensation and benefit costs were partially offset by benefits from structured cost actions taken through Integration 2.0 and prior years' restructuring and integration projects.

Transit SG&A expenses for the three months ended March 31, 2025 and 2024 included $4 million and $3 million, respectively, of costs related to restructuring initiatives.

Transit SG&A expenses for the six months ended June 30, 2025 and 2024 included $8 million and $6 million, respectively, of costs related to restructuring initiatives.

Liquidity and Capital Resources

Liquidity is provided by operating cash flows, borrowings under the 2022 Credit Agreement and the 2024 Credit Agreement, each with a consortium of commercial banks, and proceeds from the Company’s Senior Notes.

Liquidity is provided by operating cash flows, borrowings under the 2025 Credit Agreement, with a consortium of commercial banks, and proceeds from the Company’s Senior Notes.

Additionally, the Company utilizes the Revolving Receivables Program and supply chain financing program described below, as well as other short-term financing agreements with certain banks, for added flexibility as part of our liquidity management strategy.

The following is a summary of selected cash flow information and other relevant data:

Three Months Ended

Six Months Ended

In millions 2025 2024

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Financing activities $ 454 $ (523)

Operating activities In the first three months of 2025, cash provided by operating activities was $191 million compared to $334 million in the first three months of 2024.

Significant changes to the sources and (uses) of cash for the three month periods include the following:

• $50 million from increased Net income;

• $(347) million from changes in receivables driven by changes in the Revolving Receivables Program and the timing of collections from customers;

• $176 million from changes in the timing of customer deposits.

Investing activities In the first three months of 2025 and 2024, cash used for investing activities was $(44) million and $(19) million, respectively.

During the first three months of 2025, Wabtec used $(44) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes.

During the first three months of 2024, Wabtec used $(31) million for additions to property, plant, and equipment and received $12 million of proceeds from disposals of property, plant and equipment.

During the first quarter of 2025, Wabtec announced definitive agreements to acquire Inspection Technologies and Dellner Couplers, with purchase prices of approximately $1.78 billion and $960 million, respectively.

Wabtec intends to finance these acquisitions using cash on hand, together with a mix of short- and long-term borrowings.

Financing activities In the first three months of 2025, cash used for financing activities was $(172) million which included $4 million from net changes in debt, $(98) million in stock repurchases, $(43) million of dividend payments, and $(34) million of payments for income tax withholding on share-based compensation.

In the first three months of 2024, cash used for financing activities was $(289) million, which included $(58) million from net changes in debt, $(175) million in stock repurchases, $(36) million of dividend payments, and $(23) million of payments for income tax withholding on share-based compensation.

On April 23, 2025, the Company amended and restated the 2022 and 2024 credit agreements, which increased the amount available under the Revolving Credit Facility to $2 billion, combined the term loans outstanding at March 31, 2025 into a single $475 million term loan and added a new delayed draw term loan for $250 million.

The new delayed draw term loan is available for borrowings for fifteen months.

Operating activities In the first six months of 2025, cash provided by operating activities was $400 million compared to $569 million in the first six months of 2024.

Significant changes to the sources and (uses) of cash for the six month periods include the following:

• $98 million from increased Net income, partially offset by $(32) million for a non-cash gain on mark-to-market derivatives;

• $(97) million from changes in receivables driven by the timing of collections from customers;

• $(60) million from changes in inventory primarily driven by the timing of locomotive deliveries due to a supplied part issue;

• $(58) million from changes to employee related benefit payments.

Investing activities In the first six months of 2025 and 2024, cash used for investing activities was $(98) million and $(57) million, respectively.

During the first six months of 2025, Wabtec used $(83) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes and used $(21) million for acquisitions.

During the first six months of 2024, Wabtec used $(77) million for additions to property, plant, and equipment and received $20 million of proceeds from disposals of property, plant and equipment.

Financing activities In the first six months of 2025, cash provided by financing activities was $454 million which included $735 million from net changes in debt, $(148) million in stock repurchases, $(87) million of dividend payments, and $(39) million of payments for income tax withholding on share-based compensation.

In the first six months of 2024, cash used for financing activities was $(523) million, which included $(58) million from net changes in debt, $(375) million in stock repurchases, $(71) million of dividend payments, and $(23) million of payments for income tax withholding on share-based compensation.

During the second quarter of 2025, the Company entered into the 2025 Credit Agreement, which amended and restated the 2022 Credit Agreement and refinanced the 2024 Credit Agreement.

The 2025 Credit Agreement increased the amount available under the Revolving Credit Facility to $2.0 billion and provided a Term Loan Facility of $725 million.

The Term Loan Facility was utilized to refinance (i) $250 million of the outstanding Delayed Draw Term Loan under the 2022 Credit Agreement and (ii) $225 million of the outstanding term loan under the 2024 Credit Agreement.

After June 30, 2025, the remaining $250 million under the Term Loan Facility was drawn and utilized as part of funding for the Inspection Technologies acquisition.

Also during the second quarter of 2025, the Company issued $500 million of Senior Notes due in 2030 and $750 million of Senior Notes due in 2035.

Proceeds from the 2030 Notes and cash on hand were utilized to repay the outstanding amount of the 2025 Notes at maturity.

Proceeds from the 2035 Notes were utilized as part of funding for the Inspection Technologies acquisition.

During the first quarter of 2024, the Company entered into the 2024 Credit Agreement for a term loan of $225 million.

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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 repay the outstanding amount of 2024 Notes at maturity.

As of March 31, 2025, the Company held approximately $698 million of cash, cash equivalents and restricted cash, of which approximately $294 million was held within the United States and approximately $404 million was held outside of the United States, primarily in Europe, India, Brazil and China.

As of June 30, 2025, the Company held approximately $1.50 billion of cash, cash equivalents and restricted cash, of which approximately $976 million was held within the United States and approximately $523 million was held outside of the United States, primarily in Europe, India, and Brazil.

While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States net of any tax impacts.

As of March 31, 2025, approximately $9 million of the Company's $698 million cash balance was held in escrow related to recent acquisitions and was classified as restricted.

may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

As of June 30, 2025, approximately $13 million of the Company's $1.50 billion cash balance was classified as restricted.

We or our affiliates may, from time to time, seek to retire or purchase outstanding debt through negotiated or open-market cash purchases, exchanges, or otherwise, and such transactions, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Revolving Receivables Program

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Net cash proceeds received from the sale of receivables in exchange for cash equal to the gross receivables sold are included in cash from operations within the Condensed Consolidated Statement of Cash Flows.

During the three months ended March 31, 2025, the Company borrowed and repaid $175 million against the collateralized receivables.

There were no receivables sold during the three months ended March 31, 2025.

Net cash proceeds from receivables sold included in cash from operations was $210 million for the three months ended March 31, 2024.

During the six months ended June 30, 2025, the Company borrowed and repaid $350 million against the collateralized receivables.

There were no receivables sold during the six months ended June 30, 2025.

Net cash payments included in cash from operations from the Revolving Receivables Program was $(20) million for the six months ended June 30, 2024.

Additional information with respect to the Revolving Receivables Program is included in Note 2 of "Notes to Condensed Consolidated Financial Statements" included in Part I, Item 1 of this report.

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During the third quarter of 2024, the Company entered into an uncommitted bilateral money market line credit agreement which provides an aggregate borrowing capacity of $150 million, for general business purposes and working capital needs within a quarter.

Total Available Liquidity

The components of total available liquidity were as follows:

In millions June 30,

2025 December 31,

Cash and cash equivalents

$ 1,486 $ 706

Revolving Credit Facility 2,000 1,500

Term Loan Facility 250 —

Revolving Receivables Program

Total Available Liquidity $ 4,086 $ 2,556

On July 1, 2025, Wabtec acquired Inspection Technologies for $1.78 billion, which was financed through a combination of cash on hand, proceeds from the 2035 Notes, and borrowings under other sources of available liquidity.

On March 18, 2025, Wabtec announced a definitive agreement to acquire Dellner Couplers, with a purchase price of approximately €890 million.

In connection with the announced definitive agreement to acquire Dellner Couplers, the Company

entered into foreign exchange contracts for a notional amount of €440 million to mitigate foreign currency exposure associated with the acquisition.

In addition, on July 7, 2025, Wabtec announced a definitive agreement to acquire Frauscher Sensor Technology Group, with a purchase price of approximately €675 million.

Wabtec intends to finance these acquisitions using cash on hand, together with a mix of short- and long-term borrowings.

Guarantor Summarized Financial Information

The obligations under the US Notes issued by Westinghouse Air Brake Technologies Corporation (the "Parent Company") have been fully and unconditionally guaranteed by certain of the Parent Company's U.S.

subsidiaries ("Guarantor Subsidiaries").

Westinghouse Air Brake Technologies Corporation (the “Parent Company”) has issued 3.20% Senior Notes due 2025, 3.45% Senior Notes due 2026, 4.70% Senior Notes due 2028, 4.90% Senior Notes due 2030, 5.611% Senior Notes due 2034, and 5.50% Senior Notes due 2035 (collectively, the “US Notes”).

The obligations under the US Notes issued by the Parent Company have been fully and unconditionally guaranteed by certain of the Parent Company's U.S.

subsidiaries ("Guarantor Subsidiaries"), currently comprising GE Transportation, a Wabtec Company, RFPC Holding Corp., Transportation IP Holdings, LLC, Transportation Systems Services Operations Inc., Wabtec Components LLC, Wabtec Holding LLC, Wabtec Railway Electronics Holdings, LLC, Wabtec Transportation Systems, LLC and Wabtec US Rail, Inc..

Each guarantor is 100% owned by the Parent Company, with the exception of GE Transportation, a Wabtec Company, which has 15,000 shares outstanding of Class A Non-Voting Preferred Stock held by General Electric Company.

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The following tables present summarized financial information of the Parent Company and the Guarantor Subsidiaries on a combined basis.

The combined summarized financial information eliminates intercompany balances and transactions among the Parent Company and Guarantor Subsidiaries and equity in earnings and investments in any Guarantor Subsidiaries or non-guarantor subsidiaries.

The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and Guarantor Subsidiaries.

The combined summarized financial information eliminates (i) intercompany balances and transactions among the Parent Company and Guarantor Subsidiaries and (ii) equity in earnings from and investments in any subsidiary that is not a Guarantor Subsidiary.

The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the Parent Company, as the issuer of the US Notes, and Guarantor Subsidiaries.

Summarized Statement of Income

Parent Company and Guarantor Subsidiaries

In millions Three Months Ended March 31, 2025

In millions Six Months Ended June 30, 2025

Net sales $ 3,039

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Parent Company and Guarantor Subsidiaries

In millions March 31, 2025 December 31, 2024

In millions June 30, 2025 December 31, 2024

Current assets $ 2,236 $ 1,624

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Parent Company and Guarantor Subsidiaries

In millions Three Months Ended March 31, 2025

In millions Six Months Ended June 30, 2025

Net sales to non-guarantor subsidiaries $ 479

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Parent Company and Guarantor Subsidiaries

In millions March 31, 2025

In millions June 30, 2025

Amount due to non-guarantor subsidiaries $ 7,372

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The combined summarized financial information eliminates all intercompany balances and transactions among Wabtec Netherlands and the Parent Company as well as all equity in earnings from and investments in any subsidiary of the Parent Company, other than Wabtec Netherlands, which we refer to below as the Non-Guarantor Subsidiaries.

The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and Parent Company guarantor.

The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for Wabtec Netherlands, as the issuer of the Euro Notes, and Parent Company guarantor.

Summarized Statement of Income

Issuer and Guarantor

In millions Three Months Ended March 31, 2025

Issuer and Parent Company (Guarantor)

In millions Six Months Ended June 30, 2025

Net sales $ 277

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Summarized Balance Sheet

Issuer and Guarantor

In millions March 31, 2025 December 31, 2024

Issuer and Parent Company (Guarantor)

In millions June 30, 2025 December 31, 2024

Current assets $ 1,271 $ 546

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The following is a description of the transactions between the combined Wabtec Netherlands, as the Issuer of the Euro Notes, and the Parent Company, as the parent Guarantor, with the subsidiaries of Westinghouse Air Brake Technologies Corp., other than Wabtec Netherlands, none of which are guarantors of the Euro Notes.

Issuer and Guarantor

In millions Three Months Ended March 31, 2025

Issuer and Parent Company (Guarantor)

In millions Six Months Ended June 30, 2025

Net sales to non-guarantor subsidiaries $ 19

Purchases from non-guarantor subsidiaries $ 59

Issuer and Guarantor

In millions March 31, 2025

Issuer and Parent Company (Guarantor)

In millions June 30, 2025

Amount due to non-guarantor subsidiaries $ 8,599

Contractual Obligations

During the second quarter of 2025, the Company entered into the 2025 Credit Agreement and utilized the Term Loan Facility, which will mature on April 23, 2030 to refinance (i) $250 million of the outstanding Delayed Draw Term Loan that was scheduled to mature August 15, 2027 under the 2022 Credit Agreement and (ii) $225 million of the outstanding term loan that was scheduled to mature March 14, 2029 under the 2024 Credit Agreement.

Also during the second quarter of 2025, the Company issued $500 million of 2030 Notes and $750 million of 2035 Notes.

Proceeds from the 2030 Notes and cash on hand were utilized to repay the outstanding amount of the 2025 Notes at maturity.

As a result of the foregoing, as of June 30, 2025, contractual obligations related to the repayment of long-term debt decreased for 2026-2027 from $1,520 million to $1,270 million and for 2028-2029 from $1,475 million to $1,250 million, and increased for 2030 and beyond from $500 million to $2,225 million.

On July 1, 2025, the Company utilized cash on hand, together with the proceeds from the 2035 Notes, and borrowings under other sources of available liquidity to fund the acquisition of Inspection Technologies at closing.

Company Stock Repurchase Plan

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This new authorization provides an additional $1.0 billion that became available for repurchases after the remaining availability as of December 3, 2024 was expended.

No time limit was set for the completion of the program which conforms to the requirements under the 2022 Credit Agreement, the 2024 Credit Agreement and the indentures for the Senior Notes currently outstanding.

No time limit was set for the completion of the program, which conformed to the requirements under the 2022 Credit Agreement and the 2024 Credit Agreement, and complies with the requirements under the 2025 Credit Agreement and the indentures for the Senior Notes currently outstanding.

The Company may repurchase shares in the future at any time, depending upon market conditions, our capital needs and other factors.

Purchases of shares may be made by open market purchases or privately negotiated purchases and may be made pursuant to Rule 10b5-1 plan or otherwise.

As of March 31, 2025, approximately $902 million was remaining under the stock repurchase plan.

As of June 30, 2025, approximately $852 million was remaining under the stock repurchase plan.

Forward Looking Statements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis