Westinghouse Air Brake Technologies (WAB) 26 Apr 232023 Q1 Earnings call transcript

Good morning and welcome to the Westinghouse First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]

After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference Investor like Kubacki, to now President Vice Relations. would turn over the Kristine I Please go ahead.

us and Thank you Olin; Mastalerz. quarter With first welcome and to are operator. Good of morning XXXX everyone Senior Vice earnings Finance, CFO, Rafael Santana, CEO, and President Wabtec’s today John President John call.

on presentation slide to earnings on website today earlier our investor our be our financial accessed and Today’s release with WabtecCorp.com. relations tab and along posted disclosures can were

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

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

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

turn Rafael. to now will over call the I

And Thanks, morning, everyone. Kristine. good

on to update start will Slide my framework. And I’ll our then business, long-term creation cover the financials. X. and move value with quarter John on Let’s an the progress our against perspectives

segments, strong unfavorable for XX% Revenue to year. was and is driven $XX million. strong offset effects. this was operations delivered position year, per and a growth. which partially We across versus up were $X.X was strong. evidenced the and sales financial freight billion, by transit remains Total cash prior used uncertain the but by performance flow earnings our Overall, volatile roughly We by despite environment. achieved robust Sales share a start macro which

M&A future returning shareholders. to executing continue cash We capital strategic shareholder investing to allocate and growth, by maximize on a returns from to

a of to was backlog the down down and a year. The grew backlog XX-month headwinds FX, was new percent backlog billion last $XX.X excluding multi-year year-over-year, billion. high from Total four $X.X tenths of again from X%

operating growth, the strong a profitable And is rigorous evidence. continue on growth with continue deliver of well business our strategies. confident start make principles for The ability to to and uncertainty have momentum global to volatility our we positioned to long-term our the in economy. We drive to even our and remain strength customers we’re as in year. and execute we underlying against progress the Overall,

to X, end more XXXX our in details. Shifting let’s talk Slide market our focus about expectations

at the we business traffic. across freight momentum the businesses, As slightly in underlying than quarter, our we parkings were pipeline last the lower by are North of freight lower America encouraged our remain metrics year, despite key robust but look down in same time locomotive carloads opportunities.

productivity for new to We as continue continue to demand see efficiency. solutions our that in drive opportunities and reliability, locomotives modernizations and invest fuel in significant customers

demand at North continued America Looking build, the railcar to show for rail cars strength.

the a be to XXXX industry As to delivered. XX cars is result, XX,XXX for for outlook

in momentum, have long-term sales, Overall, solutions. and to we in opportunity believe an digital with railcar continue we belts, significant growth in locomotive in modernisations building

Internationally and activity signs, to grow to world. continue the of our we also show continues base around install positive locomotives

through sector the remaining transitioning across increase efficient transit transportation and continue the world. the to the need place for Finally, safe as clean, solutions secular drivers

order for the turn volumes. results a to Brazil in locomotives signed rail highlights. which strategic Brazil’s support new to business recently discuss let’s recent Next, from We X, a in investments slide infrastructure VLI, with growing few to growing

for order specifically a applications. mining system, for new high Ultra drive our key We secured class targeted also altitude

in strong the rating. Wabtec’s and cash a sheet, Reflecting significant achieved finally, ability while our by milestone of India unit railways. Indian to in credit our XXXX flow, on our XXX of balance upgraded strength a locomotives Moody’s delivering order the And the recently resilience team business, generate to

our As years for customers positioned to the one the has of for suppliers come. largest region’s team rail and equipment growth Wabtec

to continue to needs. our the the pipeline continue of and deliver execution on well customer’s profitable focus pressing capture address with the and demonstrates this All of opportunities to momentum positioned the most growth relentless that we business, in scalable strong underlying on. innovative team’s technologies Wabtec’s

John quarter, the the over With turn call I’ll John? to segment to overall results that, review financial and performance, our

and Raphael morning. Thanks, good

our started quarter X, of in the in Turning input more quarter I’ll another first continued financial good We foreign exchange, with detail. and review year results operational despite performance, currency costs. still to elevated slide challenges and

sales Sales were for year. again driven sales, were increase a $X.XX currency impacted up by unfavorable negatively quarter year. the growth the foreign were points. XX.X% the segments percentage X.X exchange, reflects very which quarter by first billion, from prior trade in our which versus by were XX.X% strong last which Sales QX reduced revenue once

was GAAP and as the margin year higher we versus in down benefits generation costs. mix business The by operating X.X higher was expected. next XX.X%, QX sales development million between up higher offset points a driven $XX prior had the For of groups operating income were by sales rich of less quarter, sales. Adjusted product percentage

the per which year was first earnings quarter share $X.XX, ago. a versus GAAP diluted up XX.X% were

$XX of $XX pretax we restructuring, to was run related to During X.X by of our operations Wabtec’s XXXX. the charges to savings million had million and $X quarter, drive million to integrate for initiative integration which further rate

demonstrating quarter diluted share, momentum of were and Wabtec the business underlying our navigate through earnings per $X.XX Overall, year. adjusted to up another conditions. quarter delivered macroeconomic the solid prior the the strength volatile of XX.X% In versus ability results and

review let’s detail. more X, our product slide lines in to Turning

were strong sales up First consolidated XX.X%. quarter very

an XX.X%. increased to sales demand build availability, due versus sales Excluding foreign along products. industrial sales our last exchange, were share quarter OE year, locomotive XX.X% Equipment increase largely this currency up to for due XX.X% Component by from in with product year, year. higher up versus sales driven last were railcar market last were and up higher

onboard revenue which strategic locomotive XX.X% Vision driven by robust Beena international along up products the for of last were demand sales was acquisitions Intelligence bolt-on and from Digital year. with ARINC and PTC contribution

of versus mags continues fleet customer from and superior timing grew of the deliveries driven and drive was to a increase for The Our larger solutions. reliability higher availability offset the increased The last services partially demand fleet year. in our services sales our year. by by active X.X% performance sales

Absent our exchange, momentum need versus as increased positive the been remains this impacts Across $XXX in foreign drivers decarbonisation sales transit in segment The to the have of million. such sales year green X.X%. up secular investments for would and as accelerate segment, currency transit X.X% urbanization prior infrastructure.

sales largely on Now was costs, moving our unfavorable Mix lower basis. a slide and gross locomotives profit margin equipment driven higher rich by currency less manufacturing business. by year-over-year to driven X, Raw mix, as exchange flat while elevated are and was forecasted, a costs. slightly still strong material of unfavorable, foreign

adversely profits by $XX quarter percentage gross Currency million. Foreign impacted first revenues Exchange X.X adversely and impacted by points,

impacted digital were and Finally, development positively gains offset manufacturing absorption costs productivity higher by by costs. higher

by execute team driving to productivity Our initiatives. continues these cost operational of mitigate impact the pressures and lean well to

was XX, to margin to adjusted SG&A Turning as XX.X%. year, the sales. were GAAP adjusted first declined $XXX versus slide of a million X.X points which SG&A quarter operating GAAP percentage up operating margin for down of million, was but slightly improved and XX.X% while to $XXX prior percentage both

as Engineering increased at expense from plan percentage flat to according X.X%. and a last sales of year was

customers utilization, invest decarbonization improve capacity, business our future leader importantly, and to in are and engineering a in current more and our continue as industry safety. productivity, opportunities. investing But technologies We resources digital we that

the XX.X%. a the were sales discussed freight Segment in $XXX million XX.X% up versus versus freight freight percentage segment, operating X.X Starting take year. margin segment I income Adjusted the million at segment results segment segments margin points the let’s as income Now on the look prior GAAP operating for quarter already strong $XXX an XX.X%. for year. of operating was up operating slide was with was last XX. adjusted XX.X% up

costs was lower increased including revenue SG&A Adjusted operating basis. were as down absorption and than by our in group. next digital product of generation mix six on a year-over-year percentage and a margin percentage a benefits The more fixed offset tenths higher of unfavorable sales, point of development

billion X.X% order backlog year. segment was reduction backlog last was segment X.X%. the The multi-year constant driven On of a by from year-over-year year’s $XX.X down in for basis, end modernizations. QX backlog last Finally, lapping currency down was

foreign segment points. transit driven offset negative up sales sales by sales, higher aftermarket were segments Unfavorable X.X Now X.X% of exchange impacted slide effects turning exchange. currency by percentage to by currency foreign XX, partially adversely

up GAAP from sales up operating income sales, offset X.X from increased operating higher restructuring by improved X.X%. costs. benefits aftermarket points was million margin operating resulted activities adjusted XX.X%. $XX of as and of higher mix in result segment from which year. Adjusted GAAP a percentage up was income income XX.X% our million, partially last an was operating integration X.X $XX This

billion Finally, would the have on for basis transit quarter X.X% constant up X.X%. been a up segment was backlog currency ago, backlog $X.X a year versus

XX. QX operations to turn for let’s million. financial our Now was cash on slide $XX used position

in working expect than that we are earnings, which higher flow inventory. particular, receivables in cash Despite and full business’s greater driving cash to benefited the higher growth, to is continue the While from year. for continuing conversion invest capital XX% we

Our $X at times debt first billion. ratio at year. was robust to the end leverage X.X the versus quarter declined our of And the liquidity prior

which mentioned, flow. continued the upgraded the Raphael during for our As the the sheet strength balance cash quarter, Moody’s strong reflects rating, credit of and outlook

is million rating of repurchases amount shareholders dividends. Wabtec in to all returned the finally, capital quarter share with agencies. With we investment through three grade across $XXX significant upgrade. returned the rated a Moody’s our and And

balanced and strategy we position continue in maximize to shareholder see can returns. financial a to you allocate As these strong and results, capital our is

With call turn the that, like back over Rafael. I’d to to

Thanks, John.

our continues our to XXXX guidance. to strong and top believe managing across provide for backlog underlying costs. strong committed We while our is that to product The driving solutions flip good growth XXXX team the to Let’s line XX and visibility beyond. lines our products into slide demand and financial discuss remain customer

in With previous to to we we sales and XXXX billion XXXX share. be continue chain are and billion EPS, continued reiterating of between $X.XX $X.X factors FX $X margin guidance, committed supply to environment this our our We’re driving also cost expansion expect disruptions. and to volatility adjusted challenging adjusted in $X.XX per still despite mind,

be cash expect conversion also to XX%. greater than We flow

on XX. Now, slide let’s wrap up

a our thanks team heard team, volatile installed resilient you our solutions base, our innovative part environment, strong year challenging to the world and our large a As to in focus customers. today, and class on delivered start relentless despite

visibility strong us that returns. and growth rigorous investor through backlog to increased outlook, remain our provided shareholder on day across drive focus on results positioned five our the deliver and year Wabtec well for to on we multiyear maximize profitable with is track Our portfolio, last year, momentum execution, long-term our

portion for the With our your you Q&A want morning. thank that, turn I’ll I to the Kristine of discussion, time over to begin to this Kristine? call

Thank you Raphael.

now limit you up yourself ask that of But to others the on do you question We question. on we one I move for before to one and follow consideration out questions. will and call,

are we ready first question. Operator, you have for queue. now additional please If questions, rejoin the our

[Operator Instructions] Stephens. come Our Please go first Justin from will ahead. Long of question

good And Thanks. morning.

Justin. Good morning,

I assumption locomotive was wondering gets of North percentage if you the utilization could any as there parked your the speak year. the revenue end sensitivity you the the to freight in your of think help way over by transaction And American of through What trend. think assuming locomotive is rest are of would fleet by the you that, for your us impacted services could XXXX? be that’s based about we that that percentage to guidance

strong options Justin, So And orders. really We finished a to important strong some multiyear I with add pipeline continue on for think start we quarter. of I’ll opportunities. a here with

chain. the a alleviation I was being locomotive into really one look of positive. was a of, the quarter parkings of you But call, were Piece piece say would actually a I’ll revenues As bit the supply that specifically, the higher. other

were locomotive for the year. planned lower have year for we what the there last That’s to had parkings we So for parking year. to up. than be The was plan not

do with the be year. more expect that, the So half we that in amplified to of second

think will be first positive. the to For half, continue we a I

depend lot of a ultimately, the and to that’s, improvement to think going be determinant. velocity And both I well on ultimately of times. going I think, that’s

year. At from XX-month I to backlog convertibility of have. high high speculate, the that So moved is the strong year The backlog. I wanted the this dynamics we new a for point, based very into we on about really the think feel the we

confident So guidance at the feel we our this ability that we to point. about on deliver provided

services freight John, Okay. – your that could more it’s provide? on there color you that’s any transaction-based. Great. And of tied on the percentage is business

they’re a billion, $X.X billion contracts, to running, it the don’t. if the are tied earning parked, the service of $X we’re And out locomotives if right? and we good Well, is of

a in forecast. provide, had expected we headwind up, So as Rafael full But parkings revenue. to year on would to don’t be Justin, mentioned, the our which basis, a grow, amount be the we

a was quarter in reduction. the saw we What slight first

I would So little we reason to But revenue little in a the benefit. target a Justin, we again, about get And fact say a little a the year was you for flat. if And that bit our expected first remember of last higher. carloads, coming what on basis, higher quarter, flat assumption that now that bit bit we And carloads is on to quarter, that, little full more X.X%. quarter. a or the doesn’t a is feel of down drove than out given that and to bit even were likely the expect talked

So that bit of could little amplify the a parking.

less your America we XX,XXX But and get fewer the number. that we specifically, of little But run provide question in Justin, that North we’ve don’t revenue. answer running got in a that bit to them

terms cadence last into in both revenue helping that’s quarterly helpful quarter a and think And the operating Understood. were you as through guidance and baked us of the follow-up, margins. John,

if any backlog coming the of curious based we on rest etcetera? as the you thoughts in the updated out have year look mix, Just what’s

question, Great Yes. Justin.

to about long-term plans. on So margin, basis line as said the we we talked that time, growth had starting our margin in a come expect grow that back it would we year And And was the full as half. last with with revenue. in all around well margin

expect we’re to really at. that’s margin half be and on So we flat, where the first

about to time faster On basis, growth that And leads revenue the the revenue, again, versus last of a actually, X.X% one. we the we’re we And half. plan, about feel our growing about We good so where talked than first down check year-over-year first on quarter. strong half had in and us at that second we’re revenue. kind in

you tempering when quarter. expectations. from at XX.X%. plan had putting As looked up Rafael was And when fourth Justin, a we fourth little the look our expected And exceed And the the currency, launching the growth mentioned fourth out that of right? quarter, from revenue did from we we take quarter together, bit

And what little XX.X%. up an we of bit got ended we and is at acceleration, ex currency a

that pulled being And some back from so of that’s difference the of revenue, half.

things. It a So supply had disruption. planned. that little than is bit more was assumption we by our was three front-loaded driven on One

bit more. So little that drove a

forecasted one was Components area take And Components very bit it second up. a The talked about We in we added that good carload our about our build to was expectations. had share. then be parkings. our the feel little over to that and to We market third is down of to It still group. XX revenue able XX.

and and able But investment working because the in inventory, were of that of a capital we’ve the availability. availability to due take we in share bit to particular, made little

those most in out So will back of the reverse themselves half.

will first will be. we’re in -- to from that X with bit so little track more standpoint, on largely and quarters. quarter, Again, a we little a the out And revenue a expected in the where that of next come bit most out come

Congrats quarter. Okay. Got on it. the

you. Thank

go Please of Fargo. comes Wells ahead. question Poliniak Allison next The from

morning. good Hi,

the wanted some timing that you little I should mod piece. you Could deliveries impact through think comment the services the how there a to think this there of on we Just John, quarter. balance was go made back year? a about color of give to

Yes.

at when And the nothing by the the the were of fair that end down full and when quarter, digit mods that’s to first still double-digit it a year. double was expect planned. But excited the So talked on amount last have about. that we’ll we year. at we the in quarter. get way That’s we And of about up actually to looked our be year, look we the couple mods the Allison, quarters growth

cadence So we’re that to. that’s referring the

when important, the Allison, at mix is quarter, where up I being look driving you of big that in comes it and a was fourth both And at to quite locomotives about that. unfavorability. talked driver that significantly time, had be mods think we

a our because group, In quarter, very And with we but little the the being we saw growth, fourth in locomotives. to is quarter. in you not a offset same equipment that as down also mix we quarter, in first the regards and unfavorable, the the of bit extent the had mods saw to strong saw

starting the should we ease, number to I balance through Perfect. just I know of the on that the growth electronic side? on think, the now side, organic there. component supply And basis. that this really be an kind thinking you there XX% sort be the trend chain this should is Or of catch growth of some sort Is on digital strong for the on is then And Digital? where what, Is part -- of it’s thought. up the year that of of to

the a market fourth say chip And we was was a in started little bit time the computer wouldn’t There lot. the first up in I again, see chips. of the quarter. catch computer to ease

little we a it. bit a more huge saw of but not portion so easing. a And But of Allison, it, bit

of just positioned add the backlog has from a -- I’ll years, Allison, perspective. the mean well that you I business in X think the I last saw good

were Some of these multiyear agreements.

better is So year backlog the actually coverage ago. it was than a

So focused sure through work be drive really to on to XXXX making into very the still continues that much team that that. got with convertibility we

the for Thanks Great. color.

Please Scott go question next Wolfe comes from ahead. of The Group Research.

This Scott Yi for is Group. Ivan on

manufacture Norfolk you. regulatory the systems? potential detection for box Thank any initiatives Palestine, bearing you East from? uptick the But into following know And are hot what I benefit you other First, orders Wab hot does could in the Can detectors. in derailment seeing not market? get Wab

of A comments couple there.

customers. se. accident rail if top not you for about us for I is our a going to mean, we’re think this think First, priority I the on safety, But comment and per both

I continue rail with further we customer what improve to rail carbon in productivity, we emissions. do mean to emissions, to partner share safety, similarly think I or efficiency

and of help detect a any further to continue on the technologies continuous improvement with a in failure customers of part we that number always and to drive subsystems, We opportunities are have that’s continued to really systems or anticipate of be space. working

can looking areas Thank any you. most actively a regions discuss for And you potential on you In the follow-up, acquisitions? you. or what are M&A now just right market? Thank

growth Well, continuing some This be ROIC profitable driving think growth for explore To ultimately the said, of doing I very and to on when much opportunistic lot higher for we’re focus really faster With drive here. that extent, inorganic, we technology. to continues we to bolt-on being organic we’re continue of a to think will I the be needs business. mean, acquisitions. our investments that on

will see terms drive in have value with believe to that of combination We modernizations that, locomotive we sales. momentum to continue opportunities to return to in we continue here the shareholders. of And opportunities and the new

renewed buybacks. Our $XXX we Board be committed pay million recently that, with the to And authorization down that. for to continue

Thank you.

Wertheimer comes Research. question Rob of next The go Please from Melius ahead.

just on shift Thank morning international one And on Is everybody. in variability two and you. delivery? locomotives. Good questions Or trend was there strength just is production had there? I freight. normal any in

then bigger digital, and like I picture could you just of if freight? runway looks a And a across the of give PTC market in international question, us general, state second, the there? kind wonder, what And

Okay.

America. continue pipeline of strong a first, both to in and North We momentum, here. see So good internationally see we deals

order really Our on conversion. team continues to be focused

it’s Africa, being Australia, If Brazil, internationally, discussed projects this at you think point. are really we’ve had about number a of Kazakhstan, that whether

a to America here quite there. be continues an I aged there’s to really efficiency, think opportunities productivity fleet North as drive opportunity there in that’s and renewing and significant really And well,

the X-year the So next had I over is think drive with years we’ve -- really towards the guidance we last here X visibility to And best this delivering provided year. that to see years. mind, opportunity we probably the momentum the in continue last in

of and elements PTC some specifically asked internationally. You

we continuing another internationally. deploying expand, We’re be market and PTC to will in

think to here opportunity, So that’s a systems. having upgrade I part the those and of we’re big the opportunity

customers. So next both the and there will continues momentum on drive the productivity really that innovation, driving efficiency products for driving general

there Transit, think I is from fundamentals of mean, the quite as a And see continue business positive well. And perspective. that positive good. I to on be the So the we trends

North may. I orders, if what’s know follow-up, potential have American fairly all that’s kind a old mean one I we that? any fleet of you bullish And the you. mentioned statement. pipeline that’s locomotive of of there. You do definitely etcetera, The characterization Thank driving

Tier ton You is X guys I efficiency, your more and have a done with efficient. think

the So maybe easier. economics that makes

having, Just I’ll and the color stop you. any commentary Thank there. from conversations you’re

or is, four, three, think driving So think four have to you a those that again, do how two. mean three of locomotives? efficiency. replace with last instead being you pulling lot by you have a of down back that locomotives train. about pulled locomotives are I if it, I you trains Or locomotives, three

are And locomotives these with burning delivering that, locomotives were I now fuel. last the mean today --

that. So benefits come that from that reliable there’s the They’re in more context.

drive next helps efficiency that So to the level.

in think that’s that, the to momentum something continue we will continue And to opportunities across that, efficiency I comes to accelerate help where see in, that And and their drive adapt in continuing that’s of to technologies that we’re opportunities with terms on. invest operations. further

IRR, Rob, we return, Typically mid-double-digit see the -- customers modernized returns. higher or new, a a little unit. in or typically our or typically new a both bit double-digit but purchase of either mid a their on on a see

So they’ve incentive. good a got strong economic very

Perfect. guys. Thank you

ahead. comes next Jefferies. from question of Please Boroditsky The go Saree

my Thanks for question. taking

question. derailment you heard business? train legislative you been in lanes anything response first, shorter There’s And how perspective? on the do your from impacting follow-up about talk that about some this. Just think Have a a to

just to not we’ve rail. on allow in here that and I technologies but other failure despite most continuing call to over more land. here continuous sense that there’s that some support our other way with various a again, working stakeholders of a improvement, once things work technologies rail equipments, to We’re us the been improvement. other continue industry at sustainable vibration share with thermal, be always also the customers moving could to mentioned And and of being customers including anticipate, predictive

a we to drive drive, that continue help set can that, the here So emissions efficiency, to I’ll continue call we think and rail with an customers productivity, have of in see safety. I space. opportunity And to solutions innovation

Maybe integration for progressing? segment follow-up. any you a just maybe is then could maybe provide an update on year? X.X And this And how level benefits

X.X, exited Integration spending a than what higher we XXXX, Sure, as Saree. anticipated. the little had we was bit

at we A we’ll the returned spent noncash, quicker. million. that means of is a with But million to very after charge. that get spot, savings that, lot $XX launching So of good. Saree, $X but that year, It $XX X million And we looking savings. took

million And into couple to grow as million move we savings that $X expect next we of the would a years, on run to in of $XX XXXX. million to $XX basis rate

And So as expect ramp of fair that. a saw we certainly that go the we first with forward quarter. we some in

the as When as a most group. a is you up little transit freight we first spending and are we terms and margins shared There of side, accrue going bit quarter, look in points of at you in a the were when about our spending but fair investment in amount over of look the said to savings again, consolidation X.X the the to majority the the in segments, well And opportunity for transit. the year-over-year.

on Some was by turn of the made investments XXXX in savings we pay certainly and beginning that to that off. those driven

color. for any expect for XXXX? what maybe around this savings numbers the be to would year provide Would it possible for Appreciate and you

No.

of to what little In million. we terms would spent of bit a year $XX of the it be the north we last expect spending,

the million $X savings, million call $XX of million up to, Saree, terms at $XX ramp to X In years it, again, midpoint. got from we’ve to

period And time. significant, build that continue will pretty over of to it it’s So

So a in little than more bit XXXX XXXX.

color. my the for Thanks Okay, questions. appreciate taking

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

we products and call, improve only around the morning everyone. I’m safety Yes, less other a but about if potentially talk accidents. could the this severe on just hi wondering could good not that we that the incident of Wabtec about range spoke

direction get What say, safety Wabtec’s that to the the improve were product Rafael, leverage that market to Wabtec’s Obviously, look portfolio? to to outcomes and products favorable there, but in move addressable industry. let’s were addressable is like, different to we across what if market we that’s if paths

what resides lot to think as Jerry, we down and will described of of here operation both capitalize also elements a it’s opportunities I that significant the A to of we other safety which improve have. I opportunity it’s, continue a comes efficiency, but to that more elements it automation, call drive seamless that a one, of number will lot that. the on that into driving really elements

to potential a and down allow introduction the new comes anticipation it level, at of at projects level, of of of and such detection new locomotive failure, technologies, whether products products that’s as some that’s it. that’s And piece that in the whether train

one is of of systems. these some the other The integration

would product allow Optimizer, our PTC operate You’re combination in Trip The of have some really which we call well. not internationally we aware deployed well a other autopilot. but of with elements is that as you America, to an largely and just train what North that fundamentally a largely with

we opportunity to customers. that are continue here the those an some to things drive have So of with

mentioned to just into PTC that, stages we complexity not it the here, larger opportunity various at the but I on of mean around of on Africa. we’re world. did gone an And drive And networks now different we’re seeing here depending we’ve I with really internationally. in PTC Brazil, parts adoption.

We’re go that’s into. to expect Asia, where we expanding and into that another area

well. got We’ve to North in process monitoring those share installing America. in the opportunity. currently or things opportunities with customers wayside the And are with that a discussing It’s it we’re as of significant of either some

that base proportion PTC existing have, drive comment would that. level you Rafael, chunk installed just good out to broader installed significant that to put locomotive on of has you point network Maybe plus base base? How really that estimate that what finer combination is folks installed on of combination technologies. of XX,XXX Trip is automation? the around on locomotive The a a that of system interesting of and And Optimizer the with

the think PTC, more, high, Optimizer, very locomotive about it deployed comes been Trip -- installed base, really locomotives or there. right? it’s it’s I’ll that’s locomotives. out at call, when other entire any across whether Wabtec When the really mean this it’s Wabtec Jerry, to if you I deployed compatible that’s running largely

here that’s that such to So that an X that. a on automating the evolution continue element trip. to we before, you have of entire that, of mean, talked area with of guys lot there we’ve of expand would opportunity is And products the which the the an of X, amplifies really as I to some to

a continued systems, of And [Ph] that with of at the these automation level. really Shamoda some The systems. that, operate network

fast helping trains, operations along railroads ultimately So but manage Planner, the allow a like the doing going really, to Movement to both redefine you’re be dispatches very the the network. mode, in which and you dispatch day. really to be Things able

of folks? John, a we material And what considering you just essentially as we cost? the actually the ask think to the over could your it And drive XXXX really be the in Super. performance of you interesting course for companies, moved material the expand drove costs most about comps that folks up looking ability industrial on over year, for quarter, at is can cost quarters? you In year-over-year fair say tailwinds balance for to cost can coming flat I

Yes. Sure, Jerry.

year goods we rapidly this our even is first rising of ago. quarters saw, after very sold with yes, that the a quarter So X cost of

into Jerry, rise, And very that anyone with that think are we are fine. to So first so basis. this from the second of costs of right? next in to quarter see very that our the want were they’ve forecasts, and there’s quarter them are but costs all costs the Since They walk say some second it’s to They got elements different that on invasion, be. moving costs I through We’ve but got down. right? tough then, skyrocketed certainly metal coming didn’t that, -- and more directions. falling, of the the what regards They XXXX. are year-ago flat elevated. you X a quarter don’t away been XXXX they’re high, is And quarter will

And about that. good so we feel very

a for standpoint And container cost. inventory. remember, Those And also similar, on our time very both transportation positive a that then the and costs, that to side. from through are the fuel flow takes

about forget then to right? so And latent right? is more was other X% inflation, not else can’t that CPI The of general good, is it up pieces in of certainly continues Labor Certainly, cost March. are inflating. Everything rise. a we

cost those XX% in them. within of of start contracts. things long-term cost those our know, under a be cost structure. So will go the revenue we are Jerry, And down, And And things lot have if about you as a then, to it got acting escalators all escalator. our of

So all it we monitor very closely.

think maintained I has driving most it is that ago, throughout in X been make last it for piece aim important the our equilibrium, sure all expect started started we’re last a continue or quarters to hit the since piece XXXX. or price have the cost X is quarter quarters. we of to the maintain and year to that we which And second important

appreciate I you. Thank it. Super.

Jerry. you Thank

Hoexter from comes question Ken Please Bank America. ahead. of of next The go

solid Thanks operator. Congratulations in Ken. dialing on This for is the quarter. Nathan [Ph]

from your XQ, first pretty Just on guidance from want international was to supposed be quickly follow is in first last think first bit from a impact a I quarter. on up the cadence. Justin’s there I more to question per little see half positive And weighted. quarterly first that that the orders

sequential Is your demand in outlook escalators a just decreases Thank on this magnitude talk and noticed assumed? about just the mind giving little into bit is the backlog, And pipeline? equipment? backlog the roughly the up, impact on to XQ being between and function just the a -- that the secondly, of the selling maybe XX-month you I so despite being much. third quarter XQ backlog. of the Would you on that commodity of total split What’s

me John with then to I’ll of first question, start the and it one. the half to on Let the pass address second

at one, of look second had the it, half if very some multiyear On orders. first significant we the last in year, you

with not really those just and that we that modernizations XXXX, XXXX supported were U.S. orders Xs and signed XXXX, the Class So in

You don’t have the year. repeat that this of

But look the ads of of several this I we backlog the I stepping the towards realization here to last really I the just that. drive of now XXXX before, to terms your XXXX. backlog visibility is, years our with as a well at as ability best into as drive solid said and have when XXXX XXXX, part momentum XXXX And think and XX-month is in

to first John? the regards part, With

back and move mix growth to to heavy year. elevated of under seeing into We the that of the we the the year, had that this contracts. in quarter. we quarterly half back the be equipment And in came mix last all of of is the is tied second in heavy unfavorable first out longer-term level we’re group mix. in XXXX with of first to quarter. unfavorable saw half was a of terms cadence, in in And the our the And going would of that Yes, half equipment expect mix obviously, contract that through and Nathan,

saw what But to a suffice of to next in don’t mitigate also of the from we that be back that mix down the the see drive that that, margin up -- in specifically year just half in delivery -- for the say half second of half again, step I’m X would half this of improved level quarters, to half it year. first would of And standpoint step and as revenue and growth back some start last back provide will we year. was from We equipment. sorry,

that’s it. clear. Thank Great, so very you much. Got

The question ahead. next Cowen. from Matt Elkott go TD of Please comes

for in If to all The backlog, disruptions delivery that’s of some much morning. Good order a increase at due are manufacturing is because the existing how easing? additions? up, moved maybe it factor dates being orders new actual maybe versus XX-month

about supply it’s on And quarter We a can to of of move quarter this baked of over there significance a would numbers. that, we right? but look quarters, disruptions, X.X% have months, that great nothing lot of any increase X when and a in that we’re like the up. ex Matt, in currency seeing it, time, of volumes. But driver release was XX nothing saw a overall significant orders magnitude. the last little bit of the the that Over that our been number just be X.X% in at

cost That’s basically. would it’s been freight. -- we for the very of talked If about quite margin what dynamics technology to growth good assume up well XX%? have mix Okay. that comparable you held freight equipment John, first huge against a margin to the bit then, Good. have didn’t year, year, mentioned, instead last And of margin you know. the nice quarter to that the the last If we and see

think because the first let will variation, is John thing significant of here Well, as me quarter-to-quarter. start terms we have I mentioned here, in

mix. it, in you was we growth just the some new saw significantly of mean, delivering locomotives, quarter. on how down mods And here it’s John, of very I But significant told

to when specifics. dynamics we continue will And some quarter-to-quarter. playing to it We’ve of of in. still down those investments which We’ve got R&D, got specialty the project comes got variation have And drive. we’ve cost elements

but careful from with provided. I’d it perspective, some as on how be we’ve So those the play they bumpy that making on feel sure will about well very assumptions of that quarter-to-quarter guidance be just we we deliver

And all is would half. expected. that why that’s And quarters. little guided. in that, with I Things a add, providing move around line we’re It’s we it it’s what with Matt, in between bit we by -- what line

kind -- in comment, quarter. thought. of right given back puts margin terms in kind always first check in in where it’s line of we any there’s going and takes first And quarter, of gate again, of the my feel to out here the but with so we And

And revenue backlog orders would update I and freight now components. and there component John, locomotives? any worked as synergies through that now Is guess, in and taking you equipment average you and manufacturer us have you’ve you railcars, can are way both from you guys in supplier? locomotive you both the on been one And inherited mentioned share expect taken realizing it. GE, Got transit haven’t your market content the the now the

it well. Matt, number. that But don’t the know provide don’t provide We Yes. number. I Actually, as we don’t

is, we group’s board working across terms we’re products, And these make in on, equipment goes pulling of to time the things. is as are seeing on other the we the as things one as many So selling and opportunities. better that yes, the

working So our locomotive one again, to we another in can yes, revenue all to deliver in the synergies seeing our with terms customers. best of products of, strong unison we’re

of the you if are we who to today, made call to around, content on, about a we some on of I’ll average. earlier $X,XXX car in freight Matt, see back comments would go that it, to translate those

integration context. into have and more be opportunity in that the was largely battery able opportunity have in this locomotives, as ability system. entitlement here the described, We that lot see the into do continue products go here, we the a due We some as ultimately to had we to sell, to, share of to share. we especially we John and to investments And we’ll the drive, serve and inventory call, I’ll really here an to of opportunity did win that the the content drive as electric customers

just system. including not speaks like and various brakes things exchangers to that parts, And that the the speaks to that heat other into

So support share work I systems up. us that customers with play we game fleets slow got to going have been you on to deployed. got driving to And us to be continue not them with really see think that we’re to auto to It’s we’ve as a executing up for through we’re But and an for opportunity how it. able services also make sure growth it’s the putting on process. that

true? closer XX,XXX that is a like average. opportunity, That’s helpful Is or the The maximum my XX,XXX. X,XXX number, to Rafael, it’s understanding

to depend again different give average But that’s It -- car we And if why a you type. car. will locomotives. by and so number. number about That’s -- think again, freight related freight that that’s

Right. And higher, right? way, way transit is

various, speaks It is sell-out systems, Again, it that’s that we brake call higher. systems have forth. systems to doors, to critical so call, and HVAC platters, the I’ll

Okay. And just one Rafael. final thing,

reference results quarter. else? I said the underlying was just the but or That reading in strong that think in business to this, you -- Q in you maybe much had too I’m into think fundamentals the something strengthened I

business. overall, I But specifically, those about talk in I when the that of made we I comments. When context thought transit across the and see

transit, in constant up the the about really backlog up backlog X%. being and on to X% underlying even basis, book-to-bill think I XX-month a if current fundamentals, think you the X- over over multiyear over

And -- same. said, we’re it see I a opportunities continuing mean, strength the segment, to as really the very much of lot pipeline in But on of Freight the see, I we there.

of an largely of, call, Pacific dollar modernization in NS. the was it signed before, got we half element orders we of year, the Union that question I’ll the and first multi-billion that the both order with the combination So

Perfect. very much. Thank you

go ahead. Markets. Steve The from of next Barger question KeyBanc comes Capital Please

follow that to made. up comment order you can going they just on know be I’m lumpy. Rafael, I

orders contracts? when you’re last with kind very orders? multiyear quarters mods, booking not from should new got been service a down having periods equipment, X row, freight this is or What we range year. in expect billion for tough comps But or in $X You low of

look we’re not it. a I X-year driving. every that year. going as the I It to that’s be again to mean Here, shall pipeline I at signed going that’s over agreement, billion, $X convertibility lumpy. opportunities And the repeat is comes to down of

So about. we’re that’s a little bit of that talking lumpiness that

We have are to working multiyear and orders. we’re with our those sure driving customers really making that

to pipeline of I visibility the think product opportunities. terms of the revenue is to equipment. it’s and both of of cost the new call, those in of And product, on here drive, the in best quality the good the terms the the opportunity combination of modernizations both but get. that interest both I’ll we growth And in continue

the the which confidence us look really out into and starting XXXX first part backlog, XX-month provides good to on So into well. and of now there as with good convertibility XXXX the the visibility visibility

years. expanding backlog? X have you beyond Yes. better macro past concerns, they significantly to you months up think Do lower the stable provides more so at given investors beyond higher about And backlog visibility from over given quarters? just And stability have thought has coming been XX where or have pretty periods deliveries backlog scheduled $XX the for you that X can billion

and XXXX. visibility now, And I’ve at what the focus XXXX, this which XXXX about we that’s to looking That’s really in us. that visibility those the with And over convertibility the on down a the us. of had our of highlighted and backlog. right have multiyear business, key really -- ultimately It’s elements that’s then comes provide area why of orders for

I’ll had that guidance terms in there have business very much expansion call X-year I back the something It’s and provides the of how terms here provided We But both, which revenue making that terms visibility behave. business. we margin will that discussions. in is of sure for go expansion continue to the of in outlook, evaluate the we’ll year to last

We’re committed to that. on deliver

multiyear the Steve, the grown grown. Each X ever has backlog since backlog in every has and years And year, merger. last the the

I concerns $XX that mean, the in period, terms outcome. back anything I you over fairly a It’s do $XX out are be concerns it of improve order which Well, can now. was when look Understood. stable XQ visibility that. at just billion. say would it go to is billion that right I to as beyond XXXX, at quarters I increasing look rates But growth investors given and that just of about things there for macro the people’s really deliverability X would helpful and like great

We’ll the go dot. see

much. very Thanks

you. Thank

Chris Please The Wetherbee Citi. of ahead. comes from next go question

morning following the Chris. guess backlog. guys. [Ph] on good on for It’s Hey Rob I

little of or well terms sense America any, the that’s But the Obviously, are period? kind just the we’re seeing You -- stepped XX-month a us curious impact multiyear you any backlog? the North of give being up of you what, kind macro, here. of if of in any bit a and within orders out pushed sort could cadence if as the in impact timing carloads having softer that seeing weak the as of

pushouts, seeing number one. not we’re Well,

signs with of associated of positive aged That’s productivity the to see pipeline in the a really the of back again, here elements what’s efficiency, also America, that made quite is North driving to in opportunities the a of earlier so terms I some bit. comments but And tied we on. internationally. some of lot fleet A and demand gains

new tied good productivity as a you’ve described. we other is of and in volume countries element in of that older of efficiency in like also of of projects, got units, Brazil, like an context. Some ones, combination that driving In to replacement both terms some with

have we not orders. outs in or terms any push And delays so no, of in that seen framework,

that of like benefit progresses. the How then productivity comps thinking you the Helpful absorption, XXXX improving? that little year as absorption? the of it in Or work increase to the offset of kind quarters? the are kind of just impact we see just bit given the as color. a sounds next that also should couple over cost of And be material Should the outlook, terms business to will about an

a initial to our put for line are of by positive absorption, we SG&A unfavorable R&D And mix basis. we as was there, of full and all percent we year that. be overall terms looking that year also to revenue Well, margin spending the by with the in to offset driven in that expect the partially of up year guidance is be part throughout productivity, would then and on a Rob, in be that

gave of track we quarter, first So in the we the And change at largely see the margin. will in the we look again, back margin grow of don’t we’re that when any terms right as half guidance that the on margin in year.

costs And still cost energy. as I is or some very volatile, costs organization, copper both high. spot remain the think in down an despite we about coming pricing if Like fact management remain Rob, when through on really diligent see order and very market. you that process, the transportation you think

So very on the team continues diligent those. to be

little get feels additional of if wanted just clarification Got like which step the there. kind helpful. I the a guidance. in the progresses, sense trying benefit just should year baked up what’s was But of That’s to bit as a it. of I

Thank you.

Morgan comes question from Stanley. next ahead. Cumming of The go Please Dillon

your Rafael, question. of the comments want Thanks Transit back kind to morning. for to on Good I Great. the go segment.

Is It sense metro cars? has just just bit nearer near of the near-term more driving more I in feeling positive the of optimism more? I’m is a of term. actually there. been of opaque actual just the governments on want of backdrop a better the better the exiting utilization kind But as incrementally some to kind mentioned You curious it what get more term? be driving It’s investing Is been it market. quarter. a

X%. with bit which results, a the first just Well, so organic quarter of little welcome growth over

extent, from catch I we’ve think benefited quarter supply some due up disruptions. to to in the chain

above strong. XX to months mention X book-to-bill and I So piece. you being a that’s to it, fundamentals the multiyear think the of about backlog. I the look did But business

simplify pleased here I have improve still significant to think and sustain margins. footprint the we to but work progress, see ahead further we’re the

I you’re variation continue think going to to quarter-to-quarter. see some

the for margin freight to expansion transit year, our in we’re and business well. But both working drive for as

continue authorities see continues we to with rail. transit; our opportunities positive in invest strong to drive very us. spending backlogs And in OEMs Spending I that a to customer continue also for think on committed fundamentals the have really some there continue to be to infrastructure. which context, government

you Okay. also to Brazil made regards materialized. That’s build-out, over to fair. of infrastructure for And opportunity volumes bit how I with second. right, the be a might a structural then could rail if a time. see just there there more talking comment Obviously, back come the about is order that to a nice But higher

a of higher market in a seeing as drive kind longer think I that that more been you’ve XX term? per longer in about opportunity chances to GE of XXX-unit used that to Any market year. actually quantify market thinking term recently could terms what

place. very growing And quarter. terms adopted number see we There’s a that see We opportunity in significant new and This there. the that this taking of see ultimately, that we right, a strategic very as as largely customer a you’re call direction. solutions, I’ll in a step concessions Wabtec of

think, I think got drive we’ve I with we been, have from really growth starting customers ahead to and very partnering drive customers, efficiency, really built that us. time benefiting opportunity over of to on a story here productivity solid we’ve and

the you that numbers probably context. us for say I’d in XX-plus for think market of the In terms about can unit market,

Great. Thanks Rafael.

Thank you.

turn like closing back the This would concludes over any remarks. our to for Kubacki question-and-answer to session. conference I Kristine

look speaking Thank Andrea. again you, you, for forward We you your Thank to with next participation everyone, today. quarter.

now disconnect. Thank has you today’s presentation, may and conference you attending concluded. now for The