What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-22 compared with 2026-04-22 · 222 added, 86 removed, 249 unchanged (55% of the section changed)

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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 and applications.

Our highly engineered rail and transit 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.

Our highly engineered rail and transit products, which are designed 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.

Our core products and services are essential in the safe and efficient operation of freight rail and passenger transit vehicles.

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 2026, approximately half of the Company’s Net sales came from customers outside the United States.

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

In the first six months of 2026, approximately half of the Company’s net sales were generated from customers outside the United States.

Business Update

During the first quarter of 2025, Wabtec announced a definitive agreement to acquire Dellner Couplers, a global leader in highly engineered safety-critical train connection systems and services for passenger rail rolling stock.

The acquisition subsequently closed on February 10, 2026 for approximately $1.053 billion.

Additionally, during the first quarter of 2026, Wabtec secured a multi-year, multi-billion dollar mining contract for drive systems and aftermarket parts, won a multi-year modernization order in the U.S.

for $210 million, and signed a $54 million Transit brake and couplers order, which contributed to the overall increase in backlog of $3.4 billion from December 31, 2025 to $30.8 billion at March 31, 2026.

The acquisition subsequently closed on February 10, 2026 for approximately $1.053 billion and is included within our Transit Segment.

Total multi-year backlog increased $3.5 billion during the first six months of 2026 to a record $30.9 billion at June 30, 2026.

Significant Freight orders included a multi-year, multi-billion-dollar mining contract for drive systems and aftermarket parts, a $1.0 billion Australian order spanning across new locomotives, components, digital solutions, and multi-year services, a $210 million U.S.

locomotive modernization order, a $184 million Positive Train Control (PTC) order, and a $52 million mining drive systems order in the Asia-Pacific region.

We also began executing the first EVO modernization build to support the commercial rollout to the installed base.

Key Transit orders during the first six months of 2026 included $109 million in brakes, couplers, and platform doors.

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 2026 and 2025, Wabtec incurred $5 million and $9 million, respectively, of restructuring costs primarily for employee-related costs on programs under these initiatives.

In addition, Transaction costs incurred during the three months ended March 31, 2026 and 2025 related to recent acquisitions were approximately $13 million and $10 million, respectively.

During the first six months of 2026 and 2025, Wabtec incurred $5 million and $15 million, respectively, of restructuring costs primarily for employee-related costs on programs under these initiatives.

In addition, Transaction costs incurred during the six months ended June 30, 2026 and 2025 related to recent acquisitions were approximately $14 million and $35 million, respectively.

Future macroeconomic volatility, changes to tariffs and trade policies, impacts from regional conflicts and war, supply chain disruptions, and labor availability, amongst other things, could cause a negative impact on revenue and cost increases resulting in an adverse effect on the Company’s operating results.

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These actions include implementing price escalations and surcharges, driving operational efficiencies through various cost mitigation efforts and discretionary spend management, strategically sourcing materials, reviewing and modifying distribution logistics, and accelerating integration synergies through our strategic initiatives.

The Company has experienced increased tariff costs which unfavorably impacted our operating results and cash from operations for the three months ended March 31, 2026.

The Company has experienced increased tariff costs which unfavorably impacted our operating results and cash from operations for the six months ended June 30, 2026.

Although we do not expect a material impact to our results of operations in 2026 because of mitigation efforts, due to the volatility of trade policies, we are unable to reasonably predict the future impact.

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Consolidated Results

FIRST QUARTER 2026 COMPARED TO FIRST QUARTER 2025

SECOND QUARTER 2026 COMPARED TO SECOND QUARTER 2025

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

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Interest expense, net (80) (46)

Other income (expense), net 23 (2)

Other (expense) income, net (2) 24

Income before income taxes 518 450

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Net income attributable to Wabtec shareholders $ 395 $ 336

The following table shows the major components of the change in Net sales in the three months ended March 31, 2026 from the three months ended March 31, 2025:

The following table shows the major components of the change in Net sales in the three months ended June 30, 2026 from the three months ended June 30, 2025:

In millions Freight Segment Transit Segment Total

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

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

Acquisitions 163 69 232

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Organic 158 71 229

First Quarter 2026 Net sales $ 2,115 $ 835 $ 2,950

Net sales for the three months ended March 31, 2026 increased by $340 million, or 13.0%, to $2.95 billion compared to the same period in 2025.

Organic sales increased $60 million which was attributable to both the Freight and Transit Segments.

Freight sales increased primarily due to higher North American and international locomotive deliveries and higher mining sales, partially offset by lower deliveries of locomotive modernizations and engine overhauls and the exit of a low margin Digital project.

Second Quarter 2026 Net sales $ 2,243 $ 936 $ 3,179

Net sales for the three months ended June 30, 2026 increased by $473 million, or 17.5%, to $3.18 billion compared to the same period in 2025.

Organic sales increased $229 million, or 8.5%, which was attributable to both the Freight and Transit Segments.

Freight sales increased primarily due to higher North American and international locomotive deliveries and higher mining sales, partially offset by lower deliveries of locomotive modernizations.

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

Sales from acquisitions contributed $225 million, and favorable changes in foreign exchange increased Net sales by $68 million.

Acquisitions increased Net sales by $232 million, or 8.6%, and favorable changes in foreign exchange increased Net sales by $24 million, or 0.9%.

Cost of sales

Cost of sales for the three months ended March 31, 2026 increased by $179 million, or 10.5%, to $1.89 billion compared to the same period in 2025.

Cost of sales for the three months ended June 30, 2026 increased by $250 million, or 14.1%, to $2.02 billion compared to the same period in 2025.

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

Cost of sales as a percentage of Net sales was 64.0% and 65.5% for the three months ended March 31, 2026 and 2025, respectively.

The improvement in gross margin is attributable to productivity and cost management, savings from restructuring initiatives, and accretion from recent acquisitions, partially offset by unfavorable mix within the Freight Segment.

Cost of sales for the three months ended March 31, 2026 included $23 million of costs related to purchase price accounting for the step-up of inventory related to acquisitions to fair value on the date of acquisition.

Cost of sales for the three months ended March 31, 2026 and 2025 both included $3 million of costs related to restructuring initiatives.

Cost of sales as a percentage of Net sales was 63.5% and 65.3% for the three months ended June 30, 2026 and 2025, respectively.

The improvement in gross margin is attributable to productivity and efficiency, savings from restructuring initiatives, and accretion from recent acquisitions, partially offset by inflation driven by tariffs and unfavorable mix within the Freight Segment.

Cost of sales for the three months ended June 30, 2026 included $5 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions.

Cost of sales for the three months ended June 30, 2025 included $3 million of costs related to restructuring initiatives.

Operating expenses

Total operating expenses increased $118 million, or 27.7%, for the three months ended March 31, 2026 compared to the same period in 2025.

Selling, general and administrative expenses ("SG&A") increased $94 million for the three months ended March 31, 2026 compared to the same period in 2025.

The increase is primarily due to incremental expense from acquisitions, higher employee compensation and benefit costs, and transaction costs associated with acquisitions, partially offset by the impacts of restructuring initiatives.

Transaction costs associated with acquisitions included in SG&A were $13 million and $10 million for three months ended March 31, 2026 and 2025, respectively.

SG&A for the three months ended March 31, 2026 and 2025 included $2 million and $5 million, respectively, of costs related to restructuring initiatives.

Total operating expenses increased $95 million, or 20.4%, for the three months ended June 30, 2026 compared to the same period in 2025.

Selling, general and administrative expenses ("SG&A") increased $53 million for the three months ended June 30, 2026 compared to the same period in 2025.

The increase is primarily due to incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by lower transaction costs and the impacts of restructuring initiatives.

Transaction costs associated with acquisitions included in SG&A were $1 million and $25 million for the three months ended June 30, 2026 and 2025, respectively.

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

Engineering expenses increased $20 million and Amortization expense increased $22 million, both due to incremental expense from acquisitions.

Interest expense, net

Interest expense, net, increased $25 million to $71 million for the three months ended March 31, 2026 compared to the same period in 2025, due to higher average overall debt balances in the current period, primarily related to acquisitions.

Other income (expense), net

Other income (expense), net increased $25 million for the three months ended March 31, 2026 compared to the same period in 2025, primarily due to foreign exchange gains in the current period.

The effective income tax rate was 22.7% and 23.2% for the three months ended March 31, 2026 and 2025, respectively.

The year over year decrease in the effective rate was primarily driven by higher discrete equity compensation tax deductions.

Interest expense, net, increased $34 million to $80 million for the three months ended June 30, 2026 compared to the same period in 2025, due to higher average overall debt balances in the current period, primarily related to acquisitions.

Other (expense) income, net

Other (expense) income, net decreased $26 million for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to the nonrecurrence of a $32 million net gain on mark-to-market derivatives in the prior period associated with the acquisitions of Dellner Couplers and Frauscher.

The effective income tax rate was 23.4% and 24.8% for the three months ended June 30, 2026 and 2025, respectively.

The year over year decrease in the effective rate was primarily driven by prior period audit settlements.

Freight Segment

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Income from operations (% of Net sales) 22.5 % 21.6 % 0.9

The following table shows the major components of the change in Net sales for the Freight Segment in the first quarter of 2026 from the first quarter of 2025:

First Quarter 2025 Net sales $ 1,901

The following table shows the major components of the change in Net sales for the Freight Segment in the second quarter of 2026 from the second quarter of 2025:

Second Quarter 2025 Net sales $ 1,919

Acquisitions 163

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Digital Intelligence 4

Components (23)

First Quarter 2026 Net sales $ 2,115

Freight Segment organic sales increased by $20 million driven primarily by Equipment sales from higher North American and international locomotive deliveries and higher mining sales.

This was partially offset by decreased Services sales from lower deliveries of locomotive modernizations and engine overhauls, decreased Digital Intelligence sales driven by the exit of a low margin project, and decreased Components sales from lower North America rail car build, partially offset by strong industrial demand.

Sales from acquisitions contributed $184 million, primarily from Inspection Technologies and Frauscher, and favorable changes in foreign exchange increased sales by $20 million.

Second Quarter 2026 Net sales $ 2,243

Freight Segment organic sales increased by $158 million, or 8.2%, driven primarily by Equipment sales from higher North American and international locomotive deliveries and higher mining sales, partially offset by decreased Services sales from lower deliveries of locomotive modernizations.

Acquisitions increased sales by $163 million, or 8.5%, primarily from Inspection Technologies and Frauscher, and favorable changes in foreign exchange increased sales by $14 million, or 0.7%.

Cost of sales

Freight Segment Cost of sales increased $167 million, primarily due to higher sales volume, and Cost of sales as a percentage of Net sales decreased 1.8 percentage points.

The improvement in gross margin is attributable to productivity and cost management and accretion from recent acquisitions, partially offset by unfavorable mix within the Freight Segment and the exit of a low margin Digital project.

Cost of sales for the three months ended March 31, 2026 included $20 million of costs related to purchase price accounting for the step-up of inventory related to acquisitions to fair value on the date of acquisition.

Cost of sales for the three months ended March 31, 2026 and 2025 both included $2 million of costs related to restructuring initiatives.

The improvement in gross margin is attributable to productivity and efficiency and accretion from recent acquisitions, partially offset by inflation driven by tariffs and unfavorable mix within the Freight Segment.

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

Operating expenses

Freight Segment Operating expenses increased by $68 million, and Operating expenses as a percentage of Net sales increased 0.9 percentage points.

The increase in Freight Segment Operating expenses is primarily driven by incremental expense from acquisitions.

The increase in Freight Segment Operating expenses is primarily driven by incremental expense from acquisitions and higher employee compensation and benefit costs.

Transit Segment

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Income from operations (% of Net sales) 15.6 % 13.9 % 1.7

The following table shows the major components of the change in Net sales for the Transit Segment in the first quarter of 2026 from the first quarter of 2025:

First Quarter 2025 Net sales $ 709

The following table shows the major components of the change in Net sales for the Transit Segment in the second quarter of 2026 from the second quarter of 2025:

Second Quarter 2025 Net sales $ 787

Acquisitions 69

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Original Equipment Manufacturing 15

First Quarter 2026 Net sales $ 835

Transit Segment organic sales increased by $40 million driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels, and increased investments in sustainable infrastructure.

Sales from the Dellner Couplers acquisition contributed $41 million, and favorable changes in foreign exchange rates increased sales by $48 million.

Second Quarter 2026 Net sales $ 936

Transit Segment organic sales increased by $71 million, or 9.0%, driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels and increased investments in sustainable infrastructure.

Sales from the Dellner Couplers acquisition increased sales by $69 million, or 8.8% , and favorable changes in foreign exchange rates increased sales by $10 million, or 1.3%.

Cost of sales

Transit Segment Cost of sales increased by $68 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 restructuring initiatives.

Transit Segment Cost of sales increased by $83 million, primarily due to higher sales volume and acquisitions, and Cost of sales as a percentage of Net sales decreased by 2.1 percentage points.

The increase in gross margin was attributable to increased productivity, favorable mix within the Transit Segment, and the savings from restructuring initiatives.

Cost of sales for the three months ended June 30, 2026 included $5 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions.

Operating expenses

Transit Segment Operating expenses increased by $29 million and as a percentage of Net sales increased by 0.4 percentage points.

Higher SG&A expenses to support higher sales volume and incremental Operating expenses from acquisitions were partially offset by benefits from structured cost actions taken through restructuring initiatives.

Transit SG&A expenses for the three months ended March 31, 2026 and 2025 included $2 million and $4 million, respectively, of costs related to restructuring initiatives.

The increase in Transit Segment Operating expenses is primarily driven by incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by savings from restructuring initiatives.

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

FIRST SIX MONTHS OF 2026 COMPARED TO FIRST SIX MONTHS OF 2025

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

Six Months Ended

In millions 2026 2025

Sales of goods $ 5,201 $ 4,383

Sales of services 928 933

Total Net sales 6,129 5,316

Cost of sales:

Cost of goods (3,326) (2,931)

Cost of services (581) (547)

Total Cost of sales (3,907) (3,478)

Gross profit 2,222 1,838

Operating expenses:

Selling, general and administrative expenses (801) (654)

Engineering expenses (126) (96)

Amortization expense (178) (142)

Total Operating expenses (1,105) (892)

Income from operations 1,117 946

Other income and expenses:

Interest expense, net (151) (92)

Other income, net 21 22

Income before income taxes 987 876

Income tax expense (228) (210)

Net income 759 666

Net income attributable to noncontrolling interest (2) (8)

Net income attributable to Wabtec shareholders $ 757 $ 658

The following table shows the major components of the change in Net sales in the six months ended June 30, 2026 from the six months ended June 30, 2025:

In millions Freight Segment Transit Segment Total

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

Acquisitions 347 110 457

Portfolio Optimization (Divestitures/Exits) (21) (4) (25)

Foreign Exchange 34 58 92

Organic 178 111 289

First Six Months of 2026 Net sales $ 4,358 $ 1,771 $ 6,129

Net sales for the six months ended June 30, 2026 increased by $813 million, or 15.3%, to $6.13 billion compared to the same period in 2025.

Organic sales increased $289 million, or 5.4%, which was attributable to both the Freight and Transit Segments.

Acquisitions increased Net sales by $457 million, or 8.6%, and favorable changes in foreign exchange rates increased Net sales by $92 million, or 1.7%.

Cost of sales

Cost of sales for the six months ended June 30, 2026 increased by $429 million, or 12.3%, to $3.91 billion compared to the same period in 2025.

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

Cost of sales as a percentage of Net sales was 63.8% and 65.4% for the six months ended June 30, 2026 and 2025, respectively.

Cost of sales for the six months ended June 30, 2026 included $28 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions.

Cost of sales for the six months ended June 30, 2026 and 2025 included $3 million and $6 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Total operating expenses increased $213 million, or 23.9%, for the six months ended June 30, 2026 compared to the same period in 2025.

SG&A expenses increased $147 million for the six months ended June 30, 2026 compared to the same period in 2025.

The increase is primarily due to incremental expense from acquisitions and higher employee compensation and benefit costs, partially offset by the impacts of restructuring initiatives.

Transaction costs associated with acquisitions included in SG&A were $14 million and $35 million for the six months ended June 30, 2026 and 2025, respectively.

SG&A for the six months ended June 30, 2026 and 2025 included $2 million and $8 million, respectively, of costs related to restructuring initiatives.

Engineering expenses increased $30 million and Amortization expense increased $36 million both due to incremental expense from acquisitions.

Interest expense, net

Interest expense, net, increased $59 million to $151 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to higher average overall debt balances in the current period, primarily related to acquisitions.

Other income, net

Other income, net, decreased $1 million to $21 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to a $32 million net gain on mark-to-market derivatives in the prior period associated with the acquisitions of Dellner Couplers and Frauscher.

This was partially offset by higher foreign exchange gains in the current period, compared to foreign exchange losses in the prior period.

The effective income tax rate was 23.1% and 24.0% for the six months ended June 30, 2026 and 2025, respectively.

The year over year decrease in the effective rate was primarily driven by prior period audit settlements and higher discrete equity compensation tax deductions.

Freight Segment

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

Six Months Ended

In millions 2026 2025 Change % Change

Sales of goods $ 3,432 $ 2,890 $ 542 18.8 %

Sales of services 926 930 (4) (0.4) %

Total Net sales 4,358 3,820 538 14.1 %

Cost of sales:

Cost of goods (2,137) (1,893) 244 12.9 %

Cost of services (579) (545) 34 6.2 %

Total Cost of sales (2,716) (2,438) 278 11.4 %

Cost of sales (% of Net sales) 62.3 % 63.8 % (1.5)

Gross profit 1,642 1,382 260 18.8 %

Operating expenses (688) (547) 141 25.8 %

Income from operations $ 954 $ 835 $ 119 14.3 %

Income from operations (% of Net sales) 21.9 % 21.9 % 0.0

The following table shows the major components of the change in Net sales for the Freight Segment in the first six months of 2026 from the first six months of 2025:

First Six Months of 2025 Net sales $ 3,820

Acquisitions 347

Portfolio Optimization (Divestitures/Exits) (21)

Foreign Exchange 34

Organic changes in Net sales by Product Line:

Equipment 434

Services (192)

Components (18)

Digital Intelligence (46)

First Six Months of 2026 Net sales $ 4,358

Freight Segment organic sales increased by $178 million, or 4.7%, driven primarily by Equipment sales from higher North American and international locomotive deliveries and higher mining sales.

Acquisitions increased sales by $347 million, or 9.1%, primarily from Inspection Technologies and Frauscher, and favorable changes in foreign exchange increased sales by $34 million, or 0.9%.

Cost of sales

Freight Segment Cost of sales increased by $278 million, primarily due to higher sales volume, and Cost of sales as a percentage of Net sales decreased 1.5 percentage points.

The improvement in gross margin is attributable to productivity and efficiency and accretion from recent acquisitions, partially offset by inflation driven by tariffs, unfavorable mix within the Freight Segment, and the exit of a low margin Digital project.

Cost of sales for the six months ended June 30, 2026 included $20 million of costs related to purchase price accounting for the step-up of inventory to fair value related to acquisitions.

of sales for the six months ended June 30, 2026 and 2025 included $2 million and $4 million, respectively, of costs related to restructuring initiatives.

Operating expenses

Freight Segment Operating expenses increased by $141 million, and Operating expenses as a percentage of Net sales increased 1.5 percentage points.

The increase in Freight Segment Operating expenses is primarily driven by incremental expense from acquisitions and higher employee compensation and benefit costs.

Transit Segment

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

Six Months Ended

In millions 2026 2025 Change % Change

Net sales $ 1,771 $ 1,496 $ 275 18.4 %

Cost of sales (1,191) (1,040) 151 14.5 %

Cost of sales (% of Net sales) 67.3 % 69.5 % (2.2)

Gross profit 580 456 124 27.2 %

Operating expenses (313) (257) 56 21.8 %

Income from operations $ 267 $ 199 $ 68 34.2 %

Income from operations (% of Net sales) 15.1 % 13.3 % 1.8

The following table shows the major components of the change in Net sales for the Transit Segment in the first six months of 2026 from the first six months of 2025:

First Six Months of 2025 Net sales $ 1,496

Acquisitions 110

Portfolio Optimization (Divestitures/Exits) (4)

Foreign Exchange 58

Organic changes in Net sales by Product Line:

Aftermarket 79

Original Equipment Manufacturing 32

First Six Months of 2026 Net sales $ 1,771

Transit Segment organic sales increased by $111 million, or 7.4%, driven by strong Aftermarket and Original Equipment Manufacturing sales primarily as a result of increased demand for products and services due to fleet expansion and renewals, increased passenger ridership levels and increased investments in sustainable infrastructure.

Sales from the Dellner Couplers acquisition increased sales by $110 million, or 7.4%, and favorable changes in foreign exchange rates increased sales by $58 million, or 3.9%.

Cost of sales

Transit Segment Cost of sales increased by $151 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 was attributable to increased productivity and savings from restructuring initiatives.

Cost of sales for the six months ended June 30, 2026 included $8 million of costs related to purchase price accounting for the step-up of inventory related to acquisitions to fair value on the date of acquisition.

Operating expenses

Transit Segment Operating expenses increased by $56 million and as a percentage of Net sales increased by 0.4 percentage points.

Higher SG&A expenses to support higher sales volume, higher employee compensation and benefit costs, and incremental Operating expenses from acquisitions were partially offset by savings from restructuring initiatives.

Transit SG&A expenses for the six months ended June 30, 2026 and 2025 included $2 million and $8 million, respectively, of costs related to restructuring initiatives.

Liquidity and Capital Resources

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

Three Months Ended

Six Months Ended

In millions 2026 2025

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Financing activities $ 408 $ 454

Operating activities In the first three months of 2026, cash provided by operating activities was $199 million compared to $191 million in the first three months of 2025.

The increase was primarily driven by higher net income, partially offset by increased working capital requirements.

Operating activities In the first six months of 2026, cash provided by operating activities was $640 million compared to $400 million in the first six months of 2025.

The increase was driven by higher net income and decreased working capital requirements.

Net income was $759 million, an increase of $93 million compared to the prior year period.

Non‑cash adjustments, including depreciation and amortization of $282 million and stock‑based compensation of $50 million, further supported cash provided by operating activities and increased year over year, primarily due to incremental non‑cash expense from acquisitions and higher equity‑based compensation.

These sources of cash were partially offset by changes in working capital.

The increase in Receivables decreased cash from operations by $305 million, compared to a decrease in cash from operations of $226 million in the prior year period, driven by higher sales and the timing of collections from customers.

The decrease in Customer deposits decreased cash from operations by $64 million, compared to a $31 million increase in cash from operations in the prior year, from changes in the timing of customer deposits.

Other operating activities decreased cash from operations by $12 million, compared to an $83 million decrease in cash from operations in the prior year, primarily from changes in other accrued expenses due to the timing of payments.

Investing activities In the first three months of 2026 and 2025, cash used for investing activities was $(1,105) million and $(44) million, respectively.

During the first three months of 2026, Wabtec used $(1,062) million for acquisitions, primarily for Dellner Couplers, and used $(46) million for additions to property, plant and equipment for investments in our facilities and manufacturing processes.

During the first three months of 2025, Wabtec used $(44) million for additions to property, plant, and equipment.

Financing activities In the first three months of 2026, cash provided by financing activities was $656 million, which included $1,012 million from net changes in debt, $(242) million in stock repurchases, $(53) million of dividend payments, and $(53) million of payments for income tax withholding on share-based compensation.

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.

As of March 31, 2026, the Company held approximately $531 million of cash, cash equivalents and restricted cash, which was primarily held outside of the United States, mainly in Europe, South Africa, 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, 2026, approximately $10 million of the Company's cash balance was classified as restricted, primarily for cash held in escrow related to acquisitions.

Cash provided by operating activities also benefited from changes in working capital.

Higher Receivables decreased cash from operations by $229 million, compared to a decrease in cash from operations of $243 million in the prior year period, driven by the timing of collections from customers.

Higher Inventories decreased cash from operations by $35 million, compared to a decrease in cash from operations of $180 million in the prior year period, driven by the impact of increased raw material costs and tariffs in the prior year period.

Lower Customer deposits decreased cash from operations by $70 million, compared to a $14 million increase in cash from operations in the prior year, from changes in the timing of customer deposits.

Other operating activities decreased cash from operations by $105 million, compared to a $41 million decrease in cash from operations in the prior year, primarily from changes in other accrued expenses due to the timing of payments.

Investing activities In the first six months of 2026 and 2025, cash used for investing activities was $1,160 million and $98 million, respectively.

During the first six months of 2026, Wabtec used $1,062 million for acquisitions, primarily for Dellner Couplers and $108 million for additions to property, plant and equipment for investments in our facilities and manufacturing processes.

During the first six months of 2025, Wabtec used $83 million for additions to property, plant, and equipment and $21 million for acquisitions.

Financing activities In the first six months of 2026, cash provided by financing activities was $408 million, which included $1,049 million of inflows from net changes in debt, partially offset by $457 million of stock repurchases, $106 million of dividend payments, and $54 million of payments for income tax withholding on share-based compensation.

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

During the second quarter of 2026, the Company entered into $75 million of interest rate hedge contracts to manage its net exposure to interest rate changes and its overall cost of borrowing.

During the second quarter of 2025, the Company entered into the 2025 Credit Agreement, which amended, restated and refinanced certain prior credit agreements.

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 borrowings and (ii) $225 million of the outstanding term loan borrowings, each under a prior credit agreement.

During the third quarter of 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 Company's 3.20% Senior Notes due 2025 at maturity.

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

As of June 30, 2026, the Company held approximately $670 million of cash, cash equivalents and restricted cash, which was primarily held outside of the United States, mainly in Europe, India, South Africa, and China.

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 June 30, 2026, approximately $10 million of the Company's cash balance was classified as restricted, primarily for cash held in escrow related to acquisitions.

The Company's goal is to maintain an investment-grade credit profile, which supports access to diverse sources of liquidity and favorably impacts borrowing costs.

Rating agencies that are engaged by the Company periodically update our credit ratings as events occur.

As of March 31, 2026, the long-term credit ratings assigned to the Company were BBB with a stable outlook by Fitch Ratings, Baa2 with a stable outlook by Moody's Investors Service, and BBB with a stable outlook by S&P Global Ratings.

As of June 30, 2026, the long-term credit ratings assigned to the Company were BBB with a stable outlook by Fitch Ratings, Baa2 with a stable outlook by Moody's Investors Service, and BBB with a stable outlook by S&P Global Ratings.

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.

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Borrowings and repayments under the Revolving Receivables Program are included within Proceeds from debt and Payments of debt within the Financing activities section of the Condensed Consolidated Statement of Cash Flows.

During the three months ended March 31, 2026, the Company borrowed $445 million against the collateralized receivables.

There were no repayments against the collateralized receivables during the three months ended March 31, 2026.

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

During the six months ended June 30, 2026, the Company borrowed and repaid $476 million and $76 million, respectively, against the collateralized receivables.

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

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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The components of total available liquidity were as follows:

In millions March 31,

In millions June 30,

2026 December 31,

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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.

Each guarantor is 100% owned by the Parent Company.

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

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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 (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 combined summarized financial information eliminates (i) all intercompany balances and transactions among the Parent Company and Guarantor Subsidiaries as well as (ii) all equity in earnings from and investments in any subsidiary that is not a Guarantor Subsidiary, 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 Parent Company, as the issuer of the US Notes, and Guarantor Subsidiaries.

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Parent Company and Guarantor Subsidiaries

In millions Three Months Ended March 31, 2026

In millions Six Months Ended June 30, 2026

Net sales $ 3,242

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Parent Company and Guarantor Subsidiaries

In millions March 31, 2026 December 31, 2025

In millions June 30, 2026 December 31, 2025

Current assets $ 1,193 $ 1,434

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Parent Company and Guarantor Subsidiaries

In millions Three Months Ended March 31, 2026

In millions Six Months Ended June 30, 2026

Net sales to non-guarantor subsidiaries $ 476

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Parent Company and Guarantor Subsidiaries

In millions March 31, 2026

In millions June 30, 2026

Amount due to non-guarantor subsidiaries $ 8,130

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The following tables present summarized financial information of Wabtec Netherlands, as the Issuer of the Euro Notes, and the Parent Company, as the parent Guarantor, on a combined basis.

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 combined summarized financial information eliminates (i) all intercompany balances and transactions among Wabtec Netherlands and the Parent Company as well as (ii) 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 Wabtec Netherlands, as the issuer of the Euro Notes, and Parent Company guarantor.

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Issuer and Parent Company (Guarantor)

In millions Three Months Ended March 31, 2026

In millions Six Months Ended June 30, 2026

Net sales $ 292

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Issuer and Parent Company (Guarantor)

In millions March 31, 2026 December 31, 2025

In millions June 30, 2026 December 31, 2025

Current assets $ 245 $ 508

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Issuer and Parent Company (Guarantor)

In millions Three Months Ended March 31, 2026

In millions Six Months Ended June 30, 2026

Net sales to non-guarantor subsidiaries $ 17

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Issuer and Parent Company (Guarantor)

In millions March 31, 2026

In millions June 30, 2026

Amount due to non-guarantor subsidiaries $ 9,697

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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, 2026, approximately $975 million was remaining under the stock repurchase plan.

As of June 30, 2026, approximately $760 million was remaining under the stock repurchase plan.

Forward Looking Statements

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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 2. Management’s Discussion and Analysis