Westinghouse Air Brake Technologies (WAB) 29 Oct 202020 Q3 Earnings call transcript

Good morning and welcome to the Wabtec quarterly earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. please then question, your withdraw press two. star To being note this is event Please recorded. like conference turn would to I now the over Ms. to Vice Kubacki, President Investor Relations. Kristine of Please go ahead.

website you VP President with and Investor and to today Rafael be Santana, presentation, on and earlier earnings Thank along Dugan, our With John CEO, morning financial and Mastalerz. accessed Pat Wabteccorp.com. posted quarter slide Senior call. are release third on Finance, can disclosures, XXXX welcome the today us CFO Good Operator. of earnings our Wabtec’s and were on everyone tab Today’s Relations

we’re and based on our statements the world are today. the of Some forward-looking business making best and view

our assumptions to uncertainties more presentation. statements, earnings risks, For in our release relating detailed and please and forward-looking disclosures see the

encourage discuss read you consider also non-GAAP to and tables and metrics financial carefully you reconciliation will these as disclosures our We metrics.

I to Rafael. Now call over turn will the

We and and today. good us appreciate morning joining Kristine, safe. families Thanks your everyone. and you you remain hope I healthy

freight improved adjusted for to freight million, focused global COVID pandemic. a points operating more with improved and impact a which synergies, improvement but by execution and was due the equipment sales in basis freight somewhat sequentially our margin of $X.X for and on was to our operating quarter and the up across segment drop to the cash productivity third gradual our than This the also market but by markets XX.X% income better to $XXX the Total the as execution. recovery Adjusted balance and million strengthen income. X, teams trends freight was by transit performance working results. million a were COVID international global margin In of $XXX conversion driven third due see we allowed the the volumes project in while from are well with third of the reflected by Total transit recovery impacted directional flow quarter in increase good synergies, transit, by disruption $XXX in by offset quarter, debt the driven Turning cash billion, actions over quarter. in in transit continuing. quarter reducing primarily management. North ridership further by cost transit largely XX% along globally, to rail utilization operations is capital us America resuming. had XXX solid by we quarter sheet is slowly in and offset continue Slide sales driven These as

Our liquidity position remains billion. strong current market conditions. Total over multi-year was despite billion at $X.X backlog $XX

the end in we of on year reductions on before year. take achieve by another roughly continue reduced to XXXX. Ending million well of taking full the million further deliver XXXX X%, our headcount run of quarter, in third we over protect rate synergies up XX% $X.XX, continuing Finally, are with of company, long can, of $XXX further to deliver on to accelerating adjusted the that to control our the steps what the quarter we synergies, we take value. growth we reinforcing term and are teams we deliver track net total costs. To $XXX goals, the and EPS as area these synergies structural shareholder as necessary the our actions the progress ended of In are to

battery end. activities XX% GE services with sustainability week. team and that driving outlined over lean earlier a in New of exit our are key to our technology a own of transit operational Overall, deal aligns orders, of passenger a track and year year as several directly in This down reductions is to significant by win We about and have we our issued actively ahead we extend emissions. sustainability won cost challenging shared To including initiatives. merger this report delivered from strategy we drive reduced also schedule with to the we and on exited Transit environment footprint dynamic year quarter have Transportation York and strong our City XX% a through XXXX date, over these are

electronics, autonomous closed reduce This million order fuel for savings, a rail. and our for our trip and order will $XXX emissions also optimizer order towards date. drive to multi-year another dry In first our mining X to Class railroads single the zero-to-zero with deal solution. We will mining systems, advance largest step won increased significant is advanced digital we

transit, the U.K., in in for solid HVAC NaturoFlex, our Germany, advanced quarter well first as and contracts doors, had most the in Asia. we industry’s Australia, Finally, the natural as winning new braking brakes, and a system, France order

Looking second rail to ahead, transportation recover the from trough in quarter. levels market continues the

increasing encouraged and are noted position. international on rail recovery in Pat global Pat? I’ll performance, With our over activity. in improvement overall the advance segment freight improvement call turn We the ongoing by share financial of and North America a the quarter, transit our as to who the more will by that, the sequential volumes, markets,

good Rafael, Thanks and morning everyone.

the the billion, freight which transit Turning a segments to disruption mainly sales caused year-over-year quarter decrease were decline Slide across COVID-XX. was in The reflects our due X% X, prior year. $X.X third ongoing sales versus and to by for the

transaction of in our reconciliation income the lower year of and was operating million by expenses the million XX% of see realization result actions adjusted variable of of down million, of non-cash $XX pandemic, operating the restructuring million quarter, D and somewhat details. which disruption Appendix mainly cost as a year adjusted costs. and the $XXX release press operations synergies. third amortization excluded the sales and our quarter, over in was driven million, income continued Please In $XX for was for these For offset and was income $XXX operating by which pre-tax $XX

expenses expenses million from excluding structural the detailed is the business Now looking cost synergies. over across the $XXX SG&A and the line actions and items, SG&A X% $XX at of transaction year some of million, adjusted discussed. realization of just to year benefited restructuring which declined I

the we during eliminated the compensation expected, of depths resumption As discretionary that see we of pandemic. did certain a expenses and

SG&A For the XX% expenses Amortization due volume down expect year, decreased lower last as were million. or as to some expenses was full to to be Engineering the well year. around in largely $XX timing. outlook we $XX from This $XXX million million. project changes adjusted

to share per quarter, share found per expense $X.XX and be press diluted per GAAP earnings expense of For adjusted $X.XX. to the earnings of our XXXX, to about diluted adjusted release. had million. details share amortization earnings depreciation earnings share can bridge we be In of about non-cash we expect million $XXX attached GAAP per which and to The $X.XX third be $XXX

over backlog As of quarter. our is September multi-year XX, $XX.X about flat billion. quarter Backlog was

XX-month and which both subset backlog, Our billion transit of is multi-year provide was the $X.X freight backlog, and continues segments. rolling a visibility across good to

Slide third look segment results on quarter. segment, Across sales in at a to take freight let’s the total Now X% X. decreased billion the the $X.X

from line the driven continued last but seasonally XX% XX% when product to quarter, we terms over year. deliveries as year. deliveries sales higher parts were down result our with strong was of mods, were from due to largely last of by quarter, second a and period traffic vary improved higher sales high deliveries compared well locomotive but improving freight This fourth expect service In as can to In up lines, In due year locomotive quarter slightly quarter year of parkings, down a record quarter as often versus timing. lower as have the the the sequentially equipment locomotive third we sales overhauls. to to discussed, be which, timing

and and our electronics year COVID disruptions. opportunities year in our more Since providing to to cars continue out a storage. components build we XX% beginning business. sales aftermarket we America demonstrating versus our improvement components right for the as rail Digital have Despite OE rail improved XX% in demand year improve orders synergies line, Component XX% shift of to in digital of September, locomotives. customers. during continued parts freight million the our and $XXX to locomotives seen significant drive were margin a reflected come quarter, prior and diversification in in of expect to safety lower the down rail to car We signs over operating execution North impact, with for pipeline early electronics gradual over the on un-parking sales car top the product Overall, on positive productivity our continue volumes see as line adjusted due mix year XX.X%. of were as to higher down sales of year, the recovery our income of are within headwinds segment adjusted

was billion, down backlog slightly quarter. $XX.X prior segment from Finally, the just

by XX% remain operating by We Across over was improvement improve execution, down the quarter, over year from globally. disruptions important that an and large transit to around segment transit of project segment, sales sales and positive to Slide ridership aftermarket improving operating noted down costs the over drive improve to the services $XXX our segment to Turning OE on across up is million, adjusted continue Aftermarket year. It’s as $XX last sales which from from service was largely year decreased year operating in for X% year million, to to X, strong a part the due driven COVID-XX. sales Adjusted we levels XX%. performance. were XX% down transit expect to increase this were strong X% and year. continue as income year globe. margin note second our stemming

to we are continue segment. to actions more momentum for days, drive early execute will and on increased profitability the While the underway pleased with

which quarter. backlog up billion, was segment was transit last slightly Finally, $X.X versus

the strong million charges. one-time quarter. million inventory quarter was in $XXX during mainly Now strengthen on $XXX also the that a year, same financial our change material including working let’s generation restructuring, deposits. I’d of million transaction was and management, quarter, at customer position continued net higher from flow securitization about we and improved to impacts the by about capital full X. quarter financial approximately to the the million A/R year by note litigation there flow the due during largely since prior position turn debt on driven ago. the year $XXX and for reduced no to had cash We Throughout levels and Cash Slide our quarter $XX

last cash execute that, drive we robust quarter, slightly to was Rafael. is and is the our at are confident I adjusted turn call flow to Slide we Our third the X, strong $X.X and will sheet liquidity times, leverage our liquidity the and summary, us With still balance the end down generation, solid billion. and flexibility our plans. at of move strategic ratio In quarter giving can from the X.X back over let’s

Thanks Pat.

America, North a and recovery In most due from seeing economic global XX% and recovery quarter rail gradual but quarter, as to a still increased intermodal, are we dramatically across record volumes travel second a markets ahead, commuter in freight the high peaking Looking the have end transit activity than levels. to and volumes. [indiscernible] are agricultural, more improved than broad higher after automotive Locomotive second improves. parkings, pre-COVID in

reliability enter even and into and overhauls, expect parts position we demand demand. us recovery putting for a strength improvements, we technology accelerate in As modernizations, to greater, productivity railroads be for of and

long Kazakhstan, continue are economies Internationally, momentum we In still have harvest. continued cars and Brazil, end forecast mining, rail XXXX globally. following storage. XX% moving following are has that rail steady to are China. shown lines. Australia, Brazil, rail good after currently transit revenue indicates production remain in In see than strong volumes with agriculture terms of slow steps fleet industry remain activity started and American rail more encouraging Asia, improving. we build to these driven The to remains North from with gradual activity dependency and with optimistic the to products Russia, recently that in car signs. improved and order the car lows, for than particularly of Transitioning we markets however, lockdowns, the on will year-to-date of several has expect XXXX. the taking volumes Africa pipeline historic be where growth Overall, recovery America have recover conditions out COVID reopening line greater in transit In mining in of of the open, storage; less is are In rail to ridership an market we stable places builds, North CIS, from record Europe a remains by car markets throughout in up growth in region. In like operational continuing a sector, and the Australia, in In car Builders cars. lockdown. demand XX,XXX internationally India slowly the

rail a forward, clean, green in continues strong. be remain drivers transport. for look to safe focus, Looking the long governments term initiative of globally especially efficient to as passenger spending market transport support and Infrastructure for

range updating to range, Turning of we EPS higher to guidance are for $X.X we the adjusted guidance is to guidance sales operational our the our which of realities actions fixed our $X.XX and the year, execution to to backlog. $X.X to due to the our billion, to are end billion align and previous volume and updating visibility ongoing to face, costs to date, $X.XX largely variable we

we remain the confident in for delivering Finally, cash generation strong year.

the X environment. to quarter in strong Turning and of despite to execution team by I’m the Slide the third challenging conclude, proud a

customers. globally safe through vigilant and our while monitoring volatile to executing for on environment our Our laser employees remains COVID-XX today’s team keeping is on focused deliver

reducing to on control. what managing we we remain and coats, plan, synergy As can forward, our aggressively focusing targets, strategic executing on on delivering our cash, we go committed

to into strong that fundamentals our successfully a technologies help continue this emerge the term, today’s and resilient the more long and term company manage headwinds invest lean as will over long competitive company. We us in advantage, advance of market

every to flow, call demonstrated we our year execution, each over performance. I significant a reset, stress to Yet, thank deliver, navigated and and all synergy for that the as market and complex Wabtec I industrial they addition despite are performing strong our have we for team these test we want overall of questions, This a integration, all have member turn Before headwinds, recession, are doing. cash an the to been in pandemic. continued as organization has well to the by personally a

back long Kristine I’ll freight our Looking to term begin continue portfolio. that, mixed, are to remain turn is will to sequentially Q&A Kristine? constructive Demand and our growth. ahead, we trends With to business call portion positioned of seeing global the are encouraged most drive the should somewhat but by uniquely of we profitable improve markets. the transit across across discussion. Recovery the the

you Thank Rafael.

We will now move questions. onto

out ask I we Before limit call, one that the for follow-up consideration question of question. on one to you do, and others yourself

first Operator, the questions, have take If re-join you With queue. ready our question. are to additional we now please that,

from [Operator instructions] Your go Poliniak Wells question first Fargo. Please comes from Allison ahead.

folk, a myself, Good the transit Could was a little resilient more morning. in bit? have talk think would segment bit we I quite performance than to that including thought.

it to that faster. you’re America, never again? Is Asia concerns of starting COVID rail bit future, recovery and way how COVID, with get a quite sounds evolves Given the and the quantify think a you on folks backdrop like commuter headwind the to there Europe in terms are the and segment of North that seeing back will do just from

Let me following. start the with first

course very our of working closely We’re with customers.

cancellations, to constrained, haven’t we they work they with this but transit and I globe, are positive. dynamics government for think a customers project think I this. while around terms in is the think seeing to any budgets remain them at point, there stimulus operating authorities strong really point, support we this I seen navigate the At of through continue

comments think here. that trends. I we levels place of see be volatility that COVID, don’t to positive the that’s what in A other call going so terms like to some Europe, you measures going couple there’s but trough taking worst overall go of in of I’ll to back places still the feel

backlog. proud that, important I improvement. other our an also you do If that They I’m been are element. has the I of coming how change. U.S. see think represents so driving into think I out that’s the team we really U.S. about what see embraced only order slower transit that to in markets. think We the the think it’s versus in transit, market, With XX% market I call

direction than business, said improve think over trend continue year before I time. right margins execution, are with backlog higher margins XXX% the they improved at the I’ve to it and committed were we’re I that our has to got a We’ve that seen ago. we’re continues, think in today and so moving least

of just from do margins terms a quarter the bit help mix. the in I mix been the so just there’s way on equipment within would little impact that it guess, Can and of have dynamics freight. be in if could Great, recall, lower a the better, question quantify margins If a if equipment product terms the strong? to in weren’t freight, in I within you

was Margins You’ve the I’ve at got and the it. based I’ve electronics right just - That’s have at remain larger XX% that. digital quarter can just what on is which those drove I business growing with time, same in - XX%. got services mix. focused XX% got were electronics with primarily Allison, by equipment impacted very and We at services We mean, margins. really much improving mix, digital straightforward, down a when on variations

areas. the I of lot right think actions taking in a we’re different

We’re action going indirect synergies. continue to and taking move that to direction. costs, been delivering in on We’ve on SG&A and we’re

Great, pass thanks. it I’ll along.

Thank you.

question next ahead. from comes Stephens. go Justin Please from Long Your

on start good a business business. expectations maybe forward, and curious in morning. QX quarter going sequentially third the to cadence to know because that good American about North around the I trended QX I freight I’m and wanted would to a that of question maybe be your and Thanks that QX with aftermarket within things can it as the well, QX, hear move bit. to and just even helpful how mods

take Okay, were in Think because to second about step think the so a our X%. down on services, came quarter back, second side of other the just revenues to the first saw let car quarter on understand. XX%. We loads I close important with me it’s down

there, when X.X%, car we’ve lag improvement the Now quarter, were down, you’re volume when while there’s you X%. quarter, about seen loads come so think third of coming into third a I clearly to the

things mind. some to in keep Here’s

tell started there. move markets looking a I’ll that what also seen a direction. pick-up shorter for now, trends our parts, saw of, It’s a there international services we’re a we cycle I terms from in that What right is continuing North I’m we’re the I’ll services and and there’s lag business, improving, but seeing perspective, forward. think continue move the in they’re we’ve was volumes clearly a it positive It think There naturally I the I into call right but America to think seeing you, first in recovery. business. getting fleets as lag at to

You asked on specifically mods.

and is--there’s that overhauls that of created in being to pushed done investments so of I have fleets dynamics right, step that moving over come, providing didn’t away in years expect there’s I think because in fleet that the pent-up in course right, there to any I’ll but mods positive is you not also pent-up going have the the business. that we couple last run, services quarter the terms been variation there demand the potential quarter think pushed have to the can in do specifics that, forward. we demand so in growth from on have

Okay, thanks.

to just buybacks, are for your today. thoughts wanted where I valuation ask given on the about metrics stock the Secondly,

gap think exercise. recently the after the are any As and that market takeaways if about closing to completed? that study you’re curious you you that that valuation take from peers, planning completing any Just to actions major were perception there investor there

with last have great the me study, Let yes, turnout. done - that part start we really

segments, top go look growth differentiation we next to I and year. organic investments we think Number to one, I of to With one, an call that. sure R&D for you terms really we’re continue our a number with customers into of committed drive tell a things in make specific, was which what details element mind. is is, of amount in very continuing to capital I we to you there would what going some the work those mind. so more candid very work and think are like that’s answers, that, of On as - the on our we’re that that innovation providing great, feedback allocation, into drive little I’ll couple of

we are the there. committed and current look reprioritizing very at Of course, we as and looking environment,

to cash debt. ability We’re to drive about also reduce and our confident

We - Right and months $XXX were Just think stock the about our are time, authorization for paid now. as $XXX I down it, same a at That’s significant buybacks. and value intensifying currently dividends. million have return of to million and buybacks debt opportunity just $XXX now price to shareholders. repurchase we focus the current we have last XX look the over of share at driving we million, stock presents and both

very appreciate the Great, I helpful. time.

Thank you.

from Wetherbee Your Citigroup. ahead. next question is from go Chris Please

guys. morning good Thanks,

Good morning, Chris.

return half as continue about of I first and of next the in XQ volumes improve beyond. segment was resources potentially year to and freight we in wondering see the

incremental Specifically the bringing drive in on what that just learnings than headcount downturn? the here quarter? ability on side, third this try from are there hold off Is margins had back the what initially to the to to we stronger saw you’ve folks sequential

headcount yes. think reduced The ago. year I answer X% we’ve quarter-over-quarter, numbers, is if you look Number one, our a versus at XX%

of growth growing opportunity [indiscernible]. you I lot came if you period. we tell opportunity there got other will There’s work the from result some just we certain here and to that an a at of even see think the that’s different productivity as the leverage, case, margins volume of win remotely. to ones and areas, there’s is We’ve increased COVID more not for areas to a be looked the I’ve but learnings drive do company

a picture that’s bigger question Okay, helpful. on synergies. Maybe

that pushing degree, with maybe what’s a drivers any your be, that control, I influence of macro are think takes the bit? a in could forward that forgetting that some to Can that run you pull little rate about What puts the out about bit? XXXX. I sometime and full might bit? out little the about talked could little timing there and during risk achieving some what’s you a they think, talk to Maybe potential

going the now, $XXX a to the that pushing we’re for volume. just deliver to we’re with But year, you that tell provided with that. it’s function a I’ll of the little out million committed and and on right bit guidance we’ve of what’s what

north not $XXX of to the on We’re but volume before to I’ll there. $XXX million it only , down is say in of the year, the of help direction. deliver us so broken can and improve, course that quarter be tracking year, moving for conditions What that, will we’re that next we we million tracking have end

Okay, Thanks the time, got it. it. for appreciate

Thank you.

you. Thank

is Melius Wertheimer go from ahead. question Research. Rob next Please from Your

everybody. and is morning question Hi good My transit. on just

You had workflows on just good wonder another come. quarter left of progress I would a give update you what if margin, general on are and to

some Could You’ve the you give just us there? rolled off improvement unprofitable continued update an business. of Thanks. on your for strategy

Yes, have I’ll backlog say this to is got ongoing work, through. you’ve a that right? You work

the margin I we’ve where it’s with the comments I the make and would improvement a that basis I about so got quality disciplined on been specific that have year for now, that think so think of is orders, that’s take, of say backlog orders XXX come I the conditions more those terms than really that backlog, and over points and we continuation. a we

lot think is a I better. execution

improvement the we’ve delivery. of of in across on-time has our I embraced got lean team think principles really terms The operations.

times going on of lot different to different groups of a one that designing those footprint. have mentioning to customers. in run here, a exercise call support sometimes of We’re I’ll where businesses similar each what more--just more you efficient eight Without a spec, engineers a sometimes making I sure we’ve the into significant business got things locations, locations, through

it down engineering. comes when We the to of I’ll opportunity centers excellence have have here to what call

the of I I really reduce to maybe established we to that’s eight we to don’t like We India, four continue that pursue. with in and costs, so have significantly some five, something places sites. that opportunity need do those going can we’re think and or have those

up, going framework the XXX that year. on it, over very drive is committed margins about basis which highlighted to we’re continue but average we’re we’ve before, being disciplined to We’re to so per points

we going another the to year. not we’re and pushing next opportunity I better XXX be anything less think this to do for year, see than

margin to for left contracts helpful, but flow very that positive how point? thank clarification, Thank federal will That’s backlog and you. I’m through on at much you. this sorry the is

minimal runs first U.K. of one to the think the of was there’s work. more this a that there’s project. the contracts for quarter and I continue contract we’ll been off it by very But the open That of so we’ve I think, end fundamentally backlog year, year. next about left,

comment I think improvement to with we’re levers on it? the is the know importance I to you all we don’t if committed Pat, margin drive have. want

we’re No, of it’s that’s mentioning and run year no it’s over revenue that over so element of it’s million I margin quarter about just $XX a breakeven, quarter, a rate still right of quarter, worth each and year around think quarters. at we there’s better and this all are has cost from margin - made really--the items that than about has Rafael is that improvement that other and that actions, synergies, things in This talked outlined things earlier margin those come on the efficiencies, and executing flat now.

area. across is not This cutting in really are specific the one reductions headcount the business. So

Rafael, Pat. thanks Thanks

Thank you.

is Morgan ahead. Please Courtney from Stanley. Yakavonis question from next Your go

question. for thanks Hi, the

digital versus this quarter, would level can sounds - there’s expected expecting business of in services your high just little it comment cadence bit XXXX I thoughts going pent-up forward. you If like and than you for mods your at have know, maybe freight OE think differently demand your in we a some growth went but the you’re and

to right start are there thanks. to a us locos there? or talked demand that You multi-year digital up, about going to flow do obviously shifting orders so next contract shaping had how pent-up Help you Then mining year? is about Is order. mentioned a think you through the that in electronics, think

of markets. end sense a you give me our Let

it. let to end just Of piece transit markets, not I’m guidance me going start into way of elements into look with of course at giving the here get our XXXX, I the maybe but the

of think I see we’re continuing to signs recovery. positive

now, you we’re see at than larger ago was and a good there. it’s If trends look continuing I backlog right year to our think it

down really, come The call piece I’ll to side. freight the would second clearly it

positive services. on we’re think I

came little into As mentioned saw the seen quarter we that--a positive of markets, North think before, trends I pick-up a in second we and America, trough think lag, the on I first international there. the see start but it bit we’ve the in then I then services from levels

of of is I tend faster. up course--there things of that shorter cycle business, think a pick nature so the there’s to

similar go It think if we we’re the markets. of international equipment seeing opportunity kind started significant Now about improvement. to six we meaning months the you were dynamics, versus side, when that working the once again ago, see in I pipeline you of think

so of think is possibility to fourth means the But positive actually in I that some broader one see already there markets. XXXX. markets we’ve those which a even on deliver, quarter, converting across bringing call got to specifically into of revenues taking, signs I’ll pipeline impact international a this into

I that America, see there, at think North cycle there business, going when into pent-up terms there’s happen But being but utilization equipment in perspective. course you’re this call demand that as of ultimately is I a an you of, and With of to the pushed regard. in volatility maintenance has there’s a fleets there’s of demand look highlighted, longer lag so year, out of still. lot that and just during didn’t of said, elements many that that right, you I’ll that of course element pent-up happening is there think in it to our

them customer the deliver a news and in to in you call is mods Keep so I top up of in focus some to efficiency increase dynamics there is lot that investments think room provide of I technology of our think if accelerate there’s We’ve aging, here on opportunity I to able zero-to-zero Xs. digital the of working those here expect builds that, order so is on that’s that I’ll we work Class portfolio, With those customers, of we technology. our in to we’ve Class into fleets. to of expect do optimizer and fleet. I be lot got overhauls, we’ve - those building this, an we improve this in reliability fleet accelerating have me We’re expect an Think some North significance think working talked to fleet that The and got block to the from. a to with that, can think significant lot investment and terms automation. been on introduce because like opportunities - fleets, those very X increased another about also There’s with are of good the closely mind, about hard. I something really under-investment the the America done efficiency. fuel products to electronics a it in opens we an trip for a increase of good just to towards

better little higher then the XX% down quarter and mix for but expect the bit a given the you’re in framework year-over-year little historically think you the that just margins go be potentially to or to fourth given to mix, about it on that framework I was XX% would as in OE Thanks, expecting margin this you’ve decremental Obviously freight. quarter, a a talked quarter, be freight it, fourth back improves? to

I that, Again guidance. that flows, I the mix staying say commenting I’ll guidance away we’re and feel we’re With quarter, headwinds think and what to of also the cash of committed we’ve of through hit into teams at on the is specifics but with strong There’s think all point. confident we quarter, this about providing working our from we’re and course that. there’s guidance provided, seeing the element we’re an on

Thank you.

you. Thank

Sachs. Your next ahead. Revich Jerry comes from from go Please question Goldman

was orders, strength pockets of in on locomotive mind areas, your think two just seeing - you Could to a everyone. as deliveries by as hi, prepared in strong you would Yes the you just pleasantly I expanding in you trend well, strong remarks book pipeline expand really know, good building on freight bill, had international really morning please? surprised Rafael, those you you’re even to terms where the I and project quarter. alluded bookings of from

I opportunities the have talk already to and of here to about I the in it. into pipeline those those orders, convert we’re quarter option When in some about positive think places some we and - like strong convert Latin the team America, of fourth orders seeing signs opportunity feels

some up picked activity trends which open places at markets and in not similar seeing this other We’re Kazakhstan, point. I’d there’s in like up rather

we we to in sure We’re that want go, to that wherever we direction. continue strong certainly--we face and competition progress make

Okay, drove strong tough bookings really just quarter thank what environment? bookings expand quarter, in can the such in you, you a and on a the

There that continue this battery different order two here opportunity certainly our continue. phase expect we to solution a piece we was so was that electric customers. element I’ll of a so City market, what of a interest, great locomotive, us - it think with of to a we electrification that on customers, Transit New see of call to the for couple announced York that expand this as has a of I moving a for degree It’s big on great been significant and we’re our that. the into

to mention mining. I’ll piece is you other The

think I and so look forward commodities, resilient business. I at even as there element copper another resilience resilience, the here, of also go some think ore, part iron especially when mining really of you is that’s and specific an demonstrated has we

getting you. that Can targeting? in India, facilities the thank are about the how productivity on the Okay, talk has were you gone particular productivity you ramp you in

team in I two contract Two the things look the efficiency. a about talk profitability it’s mean, When progress. can’t I productivity Between very we’ve quarter, I hit, there. so that think of - we has there of has been course the easy, significantly you improvement continued been years, it’s things necessarily last significant positive and at but say are I monsoon last season, improved disruptive. the to COVID executing, between have been

the tough about very very XXX delivered positive more course deliver days. say We have dynamics we the and this committed the the feel point, per in to than minimum is dynamics. XX-plus the so locomotives at last I’d year, much XXX locomotives But team of

discussion. the Thanks. appreciate Okay,

you. Thank

Group from go Wolfe question next Research. ahead. from Scott is Please Your

just can next things and freight can talk up or wondering thanks. you the or for flattish, you’re markets the I’m Morning how then car just loco year, you some doing Rafael, with directionally locos directionally at alternative you electric or and guys. rail side? about sort the on of Hey, down all see talk of

couple a so things. Yes,

I reports On same we do. look all the at freight the you car think side,

cars the freight year, number for this for think I is probably around XX,XXX.

there thinking of to I could break As think North potentially is When drop here to to plays an about some international. right is, stimulus that expectation improve we’d got locomotives, XX,XXX, mid-XXs. numbers potentially you XX,XXX but to now look the around into down I that incentive question numbers, for those there’s guess next year, that you’ve out. how American on about elements be out I depending the and think

a and I here we pipeline continue think international, good see robust us. for opportunities to

fulfilled. maybe--I mind North a order are answers of orders that these think to in question. longer part think--hopefully as America, keep Those I of in cycle mentioned, had so lag I here nature the be your there’s

it. differentiation, you think into I I see on driving element mining which here, and enter the to about is the about customers point. first resilience us, that’s this of for mining, ourselves. which will for another I’ll accelerate and both would with opportunity We electrification, some mean think see think, the areas our help asked I value to year, growth business. it here electrification more at in talk area also we quarter which exciting of that an but you next in Oh,

working going element really and to mods, the see new and I do next into so fleets, fleets, element set of talked we’re element an build of, which have growth. you right positive to an me, technology ultimately drive the year. here our into dynamics of we investments, more to that hard accelerating pent-up accelerate reliable more will stepping demand of to areas, so about. efficient On there’s There’s an think I on you there’s trends for

GE still Okay, you. thoughts on the the that loco think, Wabtec content stand to there, on give that front? we helpful. we was, on the Are legacy an Then us I with you that opportunities thank improving one side. just of the Any Is where lastly, per update yet? Can deal seeing just come?

things, little we’ve it the a it’s--I seen in immaterial. mean, of call I scheme but think could I bit,

think been in it, that we’re board. is to they takes It see we I important wanting doing just adopt longer little of--the sometimes the what’s bit fully customers opportunity before a of real. is element an test but terms across it

teams before the of I we’re see we think selling. in broader so different that, than about so many couldn’t we’ve penetrated fact regions, products think even different that [indiscernible] seen now that we

never into how we’re getting these the in just exchanger we products just in our here business reach on you to million heat the selling U.S. been We - $X we���ve while deal sense kind can a - able of really of give about a small, it’s broader Russia. We’re it sense. businesses signed the take

it. our educating We’re teams through

allows having that some growth, aggressive drive really there, more can portfolio that the a a market we’re to think fact going be areas just stronger together. product team it on in us after and share I and there profitability now lot in broader is sense win so also we out improving transit, a of profitable share

you thank guys. Okay,

you. Thank

ahead. Your next Matt Cowen. Please question comes from Elkott go from

opportunities did morning, next say think Rafael, next expect year? highlighted growth guys some you I but Good you thank pockets year, revenue to total you. grow of revenue, revenue for if you

couple A things.

into next year. giving not We’re guidance

what a the perspective just I think place. how do I provided taking I on was recovery see

which started XX I first we and deliveries we’re the expect that at the America lagging I to and longer looking start you say I’d above as fourth shorter which a I business tied able internationally, is the signs see an you’re There’s element cycle less of of and started North an cases what services deliver seeing with been equipment quarter, to think order of we’re cycle, but some that, think of behind. seeing the to described of conversions is most in pipeline, to months. there, recovery here those our we than I element call there’s in so cycles, you’re has do to with of months, already shorter lot the recovery, time and six with

time Then this us is how helpful. I switching funding. upon Transit that wave when, New this hybrid is Got locomotive a there you was can help the order York MTA, it, through next transit XXXX basically understand actually City side, very that’s at $XX over order maybe to but a think blue expecting billion happening emergency encouraging, if federal contingent Is a the they’re not this if scenario week? of is deficit

I around but or any say not really transactions, number are one, customers constraints. transit globe, A to on and specific - comment orders seeing they would the couple budget customer operating things going we’re authorities

project We cancellations I before, as at seen, this haven’t told you point.

we’re there and That’s to think maybe transit finish. call seeing a significant those lot authorities I’ll shift what elements. a that where investments green, is that opportunity drive for on to significant I���ll these I of and also helps

with Got that mention it, and conversations you you’re hybrid different of these having transit locomotive? world, more around about the the did customers

we’re some the opportunity I I’ll to huge start some some some think in elements already I California, these interest. we’ve there’s started and the of going got--well, there’s very so on next to an real here specific and phase, call what of soon There’s routes, clearly we’ve think it. interest apply in of pilot a

opportunity here the just that that’s elements power of and of continues really life some fuel If batteries, to you density improve, this that efficiency terms we significantly, from in progress cost and to all automotive you see gained those of about think the seeing the down, in come the really significant due the and industry, could dynamics be to on continues accelerating see. we’re

implement green the on kind energy, this of probably But locomotive energy talking Okay, and next tier probably have on more do much, policies think then much ago years policies. about talking U.S., think sometime years? next something locomotives it’s and in think we - you longer term, could a I you a start mentioned few were of side. aggressive the reminded Do push which about to is that’s X me California of five California, in generation freight you if aggressive we the the more contingent

much there. a significant become how tier let’s adopted X has how install just been one, and talk Well, the couple a much about comments part base. of and Number from has

it, the tier it’s at consider X,XXX under--it’s of you this point. still X minimal base, if it’s think installed, maybe look at I install and if think units I I

at there products that, sure make and I So available before is we the you’re jump to what look next advantage out have think, taking it’s ultimately the into that I wave, developed. of important been think

so whatever the massive. in look electric it potentially really reduction electric, really more as on we’re through been that’s fuel a as at have simply forward. battery drive thinking been that’s any the to of than past, programs to when down can not X, talking routes, you, benefits done we I would and described That’s XX%-plus other mean, on about here to comes I Now so battery tier even why obtained X that think tier XX% probably leap

Great, thank much. you very

you. Thank

live. is ahead. question from next your Your line now go Saree Jefferies. is from Please Please Boroditsky go Saree, ahead.

growth, Hi, about was and follow-up mute. as you would margin for on Could locomotive you sorry. I on you just headwinds? locomotives, my talk international see profile target margin international expect the Then to on you any rolls provide off? that could the as just and adjustment margins how the on think Thank XXXX impact quarter, should we the contract going about question, freight in impact into you. contract Egypt the

standpoint, into coming have the decline quarters, we’ve Okay accounting that The year off so we of that the market as units that, $XX.X intangible expect flat year previous is over about lower Saree, that below falling and from the is--those we’ll a for been full in locomotive million, see definitely the number talked, that specific so than profile will next impact quarter, referring you’re it’s and down. we see to year. year. Then

that remove be year, is it’s so just the to me I any than to profitability specific next to with very But - lack going we associated go into let to number be international be limited less to there contract, going as XX that we’re contracts. of a and want see sense India

color contract from what could is forward? and any you’re to going maybe that gain how the India profile international differs the locomotives, looking on you on provide margin contracts and the you, Thank

not projects margin of part that to new, asking new on business is at international obviously Yes a costs than how level and really down of locomotives been non-recurring, Saree, pockets be really that’s higher. It to the But are opportunities. related development we’ve product on and good. It’s established basis, as initial really higher so brand can localization it It and long markets you’re new forward as was This appropriate were is development have the just accounting typical really for locomotives than new the where good. comes two locations. very markets, it in profitability item less projects be--it’s average. incurred where we can international projects have in profitable those operating average, engineering go with specific international to look of been

and here. can can of that’s good Let speak also at established like you me and of I product I look of places speak been with like an Australia, can as that speak profitability, you give the and new countries described, the beginning, that’s places of into course and been Kazakhstan, on U.S. that’s the color the mature, which investing more today now, case you’re end Africa, like market so Pat Brazil, When where places we we’ve had mature presence, I markets, platform, lower infrastructure, through first a Even on in product brand-new be you’ll go it’s see went in designing of side. the you you’re for was investing those a a time, that a as market. India, in mature

a We maybe it. think way about have that’s established the so to mature there, presence

that the additional really good margin. improvements, variable get end cost in lived to opportunity a strategic decisions opportunity, you, long yourself into these And cost lean you behind you have established, so initial enter enjoy add-on and you really a and activities because with so productivity these you units when and up contract and with for they’re a get it’s is markets, orders

aftermarket for an years, be the that’s ultimately base side. install going And XX you’re be there next serving to on to going the that

you color, the Thank appreciate up. clearing guys. for I that

you. Thank

Thank you. go from of from America. Please is The ahead. question [indiscernible] Bank next

good Hi, morning.

see a that the dig in to but on if quite demand I bit, more. we bit could side touched just You’ve little wanted to a

America, could the seeing until the if a little demand where of are give pick-up an this of growth in should of in in us more enough backlog, from that You secular kind backlog, of could in North backlog indication Maybe other you you Kazakhstan, Maybe just Latin the we and mentioned expect regions. the decline give we see strength America? magnitude strength. us or pockets demand on is a the that to color support some you’re there

very locomotive your side. the take on question focused just I’ll being

close levels where of of started and by get here pace We question it’s That’s more locomotive time on at with on more pacing, the you the are me the pretty so recovery. I like to here side, the international. for so up, to is think tend things the the elements trough zero, on I go the

see good we’re starting I a months that. see we indications robust to converting pipeline think six behind. of and lagging we America is ago, versus potentially saw some what North

below Makes sense. zero, that’s for helpful. Can’t go Okay, that’s sure.

Exactly.

On more the a maybe transit if side, you give would little color.

could had seeing Maybe organizations. discussions mentioned for of budgets of sort evolving budget You concessions you some with authorities the those that thing? the if they’re facing? you give that given how do see more pressure some that’s in they transit space, price on that municipal changing nature that contracts or are pressure. Are looking color and How that

in point, budgets their a they to did would any project fleets Europe, on at maintaining but down there But point days you here running had terms this authorities of the I’ll one point of two happens is of just they meeting wave right to those and it is We tell course what lot one just have now keep X. with are described in not volatility ago perspective at this of he customer. to what pin and they as cancellations, this a at of this trying committed you are give a so

continue we’re to watch. with customers, various working something think to Of it’s course, closely, so I very

this trains the further, in delays have think at operating, if point we have I running think it’s that a right those that to reports, and be out could guess think [indiscernible]. delay a certain and I risk looking wouldn’t I projects, industry to that I so commitment there. I Could of the this be even as some possibility. you’re to speculating thing at there’s the now a point time, trends,

at some point. got there we’ve this think I good indications

color. That’s the great for time. Thanks

That to our does Kubacki to any answer and closing remarks. turn question conclude the session. over would Ms. for conference you. I like back Thank

forward to next Thank We with you you everyone Thank catching look quarter. up participating you. Thank you today. Rachel. for

has attending today’s concluded. Thank presentation. conference Thank you. The for you now

may disconnect. now You