Westinghouse Air Brake Technologies (WAB) 14 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the Wabtec Fourth Quarter and Year-End 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Kristine Kubacki, Vice President of Investor Relations. Please go ahead.

Thank you, operator. welcome Fourth and Call. XXXX everyone, morning, to Quarter Wabtec's Earnings Good Mastalerz. us CEO, Vice and John and are President Santana; Finance, With President Olin; Rafael today CFO, John of Senior release Today's and our slide earlier can tab Investor and accessed today with on presentation, our wabteccorp.com. website financial were posted along disclosures, to on Relations be earnings

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

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

will discuss to Rafael. these the reconciliation as We also and turn non-GAAP encourage to consider read tables financial you you metrics. metrics now over and I will our disclosures call carefully

quarter, and on visibility business were year economy ago expansion XXXX. everyone. start flow XX-month the robust flow which was against XX%, on Total backlog good growth driven X.X% backlog multi-year signifying segments. progress with momentum an for segments. up as the was operations broader billion. delivered the American framework, and sales across year and and Freight XX.X% another our by We into long-term $XX $X.X morning, Kristine, by was $X.X performance up continued the was And up both quarter the value year The billion. total versus and strong margin Thanks, We in million, billion, across and then cash the margin I'll financials. despite industry. Sales cash adjusted prior quarter, And was $XXX cover billion, rail total strong the continued John quarter, flow. Revenue deals by was the from cash creation Transit year. expansion driven from both a North will our my growth, evidenced with uncertainty perspectives and update solid our earnings $X.X in business, increased and achieved from EPS was

strong team Overall, the a Wabtec year. delivered

is momentum underlying growth the across on drive the our unrelenting both focus for by encouraged positioned I'm delivering team's Wabtec and profitable the forward, Looking well believe to business I ahead. customers.

remains position financial strong. Our

to of as our in continue value of framework our And of We future confidence by cash a increase our shareholders. against execute capital in program. maximize the $X XX% share dividend and company, growth to result shareholder and buyback to approved performance investing the an our allocation XXXX authorization and replaces Board returning for future quarterly that the billion Directors in a existing our

to Slide our Shifting X. focus

and about talk details. Let's XXXX market in expectations more

our the year. efficiency. significant exited modernizations in technologies and to Yet, the and invest Freight the safety mixed, drive geographies. be markets opportunities carloads strength continue American across the fleet robust and pipeline down by last locomotive active While compared across fuel that remain while productivity, key for business we globe X.X% continue slightly demand was in of across in the industry opportunities North quarter, digital continue solutions up encouraged of metrics as business, to were international our customers reliability, where see to when the to we new locomotives, our

Significant America, is international new growth XX,XXX about the investments is at pipeline. to approximately showed The to and infrastructure demand Latin delivered. in continuing Looking cars as cars. expand Africa railcar upgrade be at robust Australia, XXXX for and outlook North markets to for Internationally, support XX,XXX America our are for across industry orders build, railcars activity core such XXXX strong Kazakhstan.

the refresh fleet and In mining, supporting truck upgrade are prices to and commodity activity an fleet. aging

globe. transportation clean, around safe and sector. solutions place, to mega need the the moving Finally, decarbonization transit trends of driving the urbanization in The and remain efficient for

demonstrating over XXX customer to America, demand let's multiyear usage CSX Next, ], we won a business down emissions. improve driving best-in-class order from to X fuel a In highlights. a North and productivity discuss for turn solution for to Slide [ recent while few modernizations

momentum team seeing mining double Looking quarter, are visibility. digits and our year. the The we is signed versus orders $XXX business, last which at up continued million totaling in over

we to quarter, in supply million electric In Also, telematics major for won market. improved brake brake of the worth our order line over will performance, These announced entrance during a efficiency India. railcar operating Transit, new $XXX systems a and systems safety provide into locomotives. high-performance the X,XXX we

expand and make competitive. platform freight to Our by shipping visibility. rail innovative increase on-time It will telematics will improve asset shipment performance more utilization

capability, region acquisition we December, strategic globally during for remaining in a our and long-term the manufacturing both in acquired continued of enhances poised XX% Kazakhstan. This Finally, our JV growth.

continued demonstrates team's customers' pipeline for across well business, on. strong needs. to most executing capture growth our the profitable of and we're our address opportunities customers focus All of delivering and innovative scalable is the with relentless pressing the this technologies Wabtec momentum on that positioned

Moving to Slide X.

strong Before over economic results through turning the ability deliver John, briefly cycle. want it our to to discuss I to

our demonstrated and Wabtec X record technologies managing predictable. more enable through We and Over significant remain will markets end favorable resilient the has combined to solid years, solutions markets, a last with leading challenging our track disruptions. and of believe us

have disciplined and past backlog strong $X.X cash for challenging North market demonstrated ability backlog X capital to rail value and years macro economy. grown execute has of our and significant volatile consistently XX-month create The we growth through over finally, billion our strategies, Our support consistently provides American despite And flow, allocation. deliver growth. visibility XX-month a the a generate

inflation operating [ the evidence margin ]. Our and track of is strong of our business productivity, deliver expansion ability to price record costs across for manage

the strength and economic execution the superior our that, turn through predictable quarter delivering with shareholder returns. With which to resilient over segment the to Our performance. I'll cycles, being technologies, John Wabtec earnings overall results of result and in and products John? call review leading our financial business, combines

everyone. and Rafael, Thanks, hello,

$X.XX of and will Transit a reflects detail. performance. versus growth X.X% operational to the quarter the were year driven I year. quarter Freight solid Sales billion, were Sales Turning the financial the more segments. which our and another increase review by strong Slide X, for across finished in fourth prior results quarter fourth both We with

operating versus For higher $X.XX, of a sales, increase higher percent were QX focused income SG&A the margin was percentage earnings year. gross fourth in cost by margin driven XX.X%, points margin X.X This year the was per GAAP million, management. prior driven as and and sales. up expenses diluted $XXX ago. up versus points points lower by a of GAAP quarter X.X improved percentage was X.X engineering Adjusted gross operating share was quarter, and XX.X% the which percentage a of

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

a addition, which $XX we exiting small product charge million. In are some generated QX related and of nonstrategic assets, lines

of I quarter, Finally, existing remaining about in the in our strength optimization LKZ another were diluted minutes. detail share talk portfolio will our per solid year. XX.X% of generated the of Wabtec adjusted prior acquisition our up quarter, million the venture quarter, on in earnings delivered In and progress the ownership few interest our underlying joint $X.XX, assembly demonstrating a on gain X.X business. more interest. XX% $XX a Overall, versus the more in Integration

X. Turning to Slide

a as Equipment detail. quarter were sales were more were deliveries mining year second sales up Recall by to in offset more locomotive for consolidated lower Let's X.X%. review were from up quarter. our as that Fourth sales last skewed year equipment down deliveries locomotive were Total during the XX.X% the sales higher XX.X%. the than very quarter. half lines significantly planned third product strong

North by $XX from million. next-gen up also acquisition driven in were and demand higher the L&M Digital were offset American digital benefited which with locomotive from industrial the revenues higher versus by of sales PTC, earlier driven by Component was railcar year, sales in Sales last for down along market, XX.X% by largely products mining. demand international products. from year, partially Intelligence sales year onboard products increased lower last our the for X.X%

contrast driven our Our services Sales fourth ] were to the was planned to sales modernization skewed mods significantly half sales, grew locomotive second new deliveries deliveries. quarter. growth by [ higher In significantly XX.X%.

performance, customers superior availability Additionally, locomotive as recognize Wabtec to parts and fleets. sales across our their continued to the show continue efficiency reliability, strength

Transit backlog. and The investments growing sales were increased sales aftermarket XX.X% and Segment infrastructure. last of strong and the sustainable in segment as for in execution drivers urbanization global OE up need our year. this our versus behind momentum is secular segment, to decarbonization accelerate core Across such $XXX markets our million across

improved productivity. mix Moving to percentage from up sales points QX favorable was margin points, exchange XX. was and year. profit Slide was currency up which gross X.X higher X.X price XX.X%, as margin last well percentage as foreign Adjusted by GAAP driven gross

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

Now turning XX. to Slide

percentage up we year, operating percentage SG&A fourth quarter, year. leverage GAAP last a flat the For X.X points million, with revenue adjusted margin focus expenses Engineering operating points was sales expense was QX margin versus as costs. higher on XX.X%, GAAP of as with last XX.X%. were about strong while a X.X was to percentage improved and $XX adjusted down which managing

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

results on starting with Slide a Freight take segment Now let's the segment. look XX, at

of were sales segment X.X% XX.X% points prior was for the income income segment up was the up the of for percentage GAAP year. X.X versus quarter. Freight operating $XX operating XX.X%, operating million an discussed, during already costs. I year. last million, Freight income margin $XXX segment operating Adjusted As GAAP $XXX million includes up optimization portfolio versus

XX.X%. was the margin, driven prior and in engineering absorption. time, The and was margin and favorable a revenue. benefited the as gross expenses segment from which improved were year higher operating at points productivity Freight percentage At higher from sales, percentage X.X the increase lower up price of significantly by SG&A mix same Adjusted

was was backlog Both XX-month visibility down period multiyear backlogs $X.XX the and good from and a into segment billion, year. the up The ago. same prior XX.X% $XX.XX beyond. X.X% multiyear demonstrate XX-month XXXX backlog Finally, billion, year our from

was XX.X%. XX. Restructuring up segment Integration adjusting were growth Transit year, last million. was Integration driven was up XX.X% costs foreign million, currency, related XX.X%. the were operating for Adjusted Adjusted were up savings. income to X.X $XXX points income Slide $XXX segment to Turning sales of operating million, and $XX QX. activities in When million sales up which X.X%. X.X up from benefits GAAP to percentage XX.X% $XX by X.X of margin was volume operating Transit

for the quarter XX-month to backlog multiyear a billion, segment $X.XX The up X.X% also was $X.XX was Transit ago. X.X% Finally, versus year backlog up billion.

Moving to Slide XX.

optimization. portfolio touch would both next as our initiative our to X in greater I The against will well these of progress unlock on like portfolio. and efforts details slides, XXXX as the across programs Over margin provide X.X Integration both our profitability the on expansion

XXXX. of $XXX $XX million, simplify, announced to With actions, by would be With a of to rate to of our rate Integration exited in $XX $XXX we we comprised our expenses of X.X, and onetime regards date run parts operations. million combination Day estimated we during recall run a of These program streamline restructuring achieved through between $XX Investor of savings expenses program that $XXX achieved that incremental to million million consolidate savings which and as XXXX. million savings are an yield million XXXX, restructuring

savings on track meet our expect in meaningfully and XXXX, we remain goals. more XXXX to to ramp We

Now turning to XX. Slide

shareholder are base. we aware, the a and earnings, improved strategic invested through with In margins we that future of driving are pleased acquisitions complementary for the we owned enhances Wabtec. installed transfer mining about very portfolio long-term bolt-on growth business we we second XXXX, return you addition its that excited have focused very capital. with and accretive its acquired And heat on driving L&M, short are is business, more for of profitable our In are on to As performance. value quarter our time the this importantly, potential

net million XX% in assembly quarter, remaining stake in our cash acquired for venture the fourth we Also, as unconsolidated the stated, Rafael LKZ of Kazakhstan of joint received. $XX late

of the gain $XX excluded noncash result a in quarter, earnings. adjusted the recorded is transaction, from million As we a which

would business Going limited be in expect impact XXXX. We results. sales to forward, XXX% and consolidated and will to by virtually owned earnings Wabtec in benefit no this our financial

results. noncash product nonstrategic represented XXXX will QX exit Sales and roughly also lines lines product lines manufacturing in We're a of these charges Pruning sales today million recognized some the of The are in profitability lower-than-average noncash, our of about announcing reducing $XXX GAAP these improve in expected charges while complexity. focus XXXX. million totaled of margin from of net $XX profile. and $XX of which million we largely exit product

our margin portfolio the Wabtec against initiative drive X.X multiyear progress announced Integration to will moves and position our help Both expansion.

strong to Fourth higher Cash million, resulting our prior $X.XX billion $XXX turn $X.X operations of the earnings cash let's financial cash on in XX.X%. versus XX. Slide improved working was Now quarter capital. total at generation and of year, increase flow position from in benefited from an billion

continued ended X.Xx quarter our $X.XX leverage debt X.Xx balance sheet the the position versus And with be was Our was quarter, billion. and strong. financial net the fourth of leverage. which year's prior liquidity end of ratio the at We to debt favorable

$XXX and invested During of acquisitions on dividends. and million we $XXX through LKZ venture to L&M share strategic XXXX, joint the repurchases returned the and million shareholders

ROIC Finally, points. by during percentage we the year improved X.X

and disciplined shareholders. to We continue returns our balanced in way to a for maximize allocate capital

strong year. for to XXXX the provide like growth team the Despite drove challenges, solid our strong margins a to the back to operating stakeholders. guidance. provides our expanded of us the turn financial recapping business our Rafael cash that, macro over quickly call flows. robust The for Overall, strong XX, Slide With all as and a enter to and profitable foundation I'd generated XXXX. revenue year resiliency delivered execution we with we Moving growth

John. Thanks,

Now let's and strongest solutions had XXXX We underlying believe for customer guidance. products the demand XX the business. to continues This pipeline discuss XXXX. turn to our our is and order across that Slide we've since our outlook

our profitable backlogs ahead. providing be an driving expansion continue uncertain The margin orders top line is as XX-month growth to strong, team for Our and in visibility to as solid and growth environment. committed XXXX multiyear well despite pipeline macro

midpoint, share, XX% versus last year. expect last and X% With the sales in about over factors these per mind, up XXXX we $X.XX $XX.X of year EPS growth midpoint at adjusted billion from of

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

positioned drive ahead, financial XXXX, growth confident [indiscernible]. profitable is I'm Looking well is that in which aligned long-term to our Wabtec to

XX. wrap up let's on Now Slide

results visibility today, a install quarter resilient base, large innovative strong customers. creation heard employees solid I'd technologies line and team, you value strong the Kristine [ dedication and With increased across is turn and out finish you've ] a maximize very your these results Wabtec part solid on our shareholder positioned returns. that, the moment on Wabtec, As I'll drive With our continuous our I underlying want to focus our our like morning. continued Q&A with whose backlog focus growth thank time over execution a to in our team on to focus Kristine? made profitable and demand to to year, thanks the world thank for of well framework. discussion. delivered improvement, portfolio, call of to possible. to take intense were class long-term in begin to These all the through this our long-term portion

you, Rafael. Thank

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

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

Today's Instructions] from Long comes Justin question [Operator Stephens. first with

good Thanks, morning. and

maybe question the start margins. freight So to on with

decline fourth mix If revenue got lot saw we you Equipment sales look sequentially. third the better. lot quarter relative to looking a like despite at Services quarter, it, were the up was down sequentially. a a

what freight the at about you're look of talk guide? you can margins XXXX of progression as freight we what anticipating kind and quarter-to-quarter pressure in drove margins that So for the

Yes.

pressure even what that the and quarter, that's stronger percentage bit segment, fourth the we versus a about with the Justin, back little margin is of and of X.X%. a at Freight we the back half quarter, margins company saw We've being wouldn't it ago year look exactly being that up I they into up fourth down half dig But our third quarter. just characterize seasonality overall and the we in this structure. strongest and the margins the fourth A talked John. the is X.X in probably as deeper between lot points. were when

look overall talked the we've about we we that forward, in again, Freight did margins the real feel about When good fourth segment. deliver we So the those guidance. quarter in

You've seen to as well Transit expect we and the as Freight XXXX. both our guidance, grow revenue segments would in and margin

guess Okay. some timing the in the of business a lumpiness helpful. in and quarter. as can I mix what fourth the quarterly a I know see That's And follow-up, of Great. basis to we deliveries, similar on saw we because

the revenue So as expected quarterly and we think there about is the of share can XXXX on earnings? anything you cadence guidance,

Yes.

about much talking handful half or in half. to given pretty X quarter moved that Again, keep a be Let's of can Justin, by it locomotives. any

revenue is important see in in that up be 'XX with framework. generally operating first also growth modestly and and expect revenue higher most in the second growth specifically, we higher line half, to part XXXX and half our But the we half. to first the expect long-term versus second we versus 'XX, So expect half to margin margins more growth see the the in than

at to the the deliveries. local we the in comping continues ] be on higher look of when margins X the side, of on against drivers hinges XXXX And cadence, the our half. second [ mods So volume timing

that. Okay. leave at it Great. I'll

line Cowen. Matt question open, perhaps is with muted? are from Elkott, And your our next today TD comes you Elkott Mr.

did is year? being this you function revenue growth. a X%. price for some higher, in? backlog revenue this X% more comps acquisitions at is I revenue versus of the revenue there growth give Sorry any just your us know, your guys XX% insight and because on asked year, you XX% the growth that. volume? about Last midpoint? Is also Can difficult baked Are more You

couple Matt, a things. of

strong. for fundamentals business the are First, the

coverage. the have We

drivers to also in fleets. of with International, as still payback. customers' and execute Fleets to overall we're old, out you've well is locomotive The of globally. customers if the freight. a very investments think here. provide fairly but positioned terms orders mining, significant are trough coming the significant digital have We about is transit, There's heard, just which drives strong, front, and demand, not in their on you portfolio

you is which expand With ahead really continued our to to as being into for our a Emissions, of that factors. have long-term deliver it's regulation emission improved number beyond as us guidance that well positions And takes with tailwind -- coverage, us. goes 'XX. we guidance. our a know, of really said, visibility consideration backlog

to North continues have 'XX, If still be loads car you think about end. low on you the America

expect down. With car and strong to approach to our really parking actually our that, freight consistently ] over we build deliver. continue say-do to ahead go with And is [ of be up, commitments. committed We continue to has ensured results ratio

my -- question, numbers headwinds the lower that freight helpful, the organic contribution And of correctly? XQ was in doing I'm in some trend revenue the growth years, quarter the you do fourth is follow-up the and why continue that to couple That's basically in 'XX? downward freight you Rafael. And kind than of of last reason to mentioned, my lowest the the if expect to organic

not Can of... Matt, I the I'm sorry, you the driver understand I'm repeat sure completely question.

the contribution downwards? North lowest the headwinds like freight I million the you the in back rail continue from revenue expect organic American freight number $XX years, a seen John, the it's that trend do And Yes, the over fourth market? function in to to revenue. it we've of Is look quarter. X organic last If

me be here. clear let So just

forth, pipeline good growth, described about for customers continuing investing at it, despite reliability. in see international. it. dynamics to just opportunities of said, America both we in to and continue carloads North some the the for both investing X element We you show we've of we're strong. feel I with pipeline an last so us of here years. to is strongest And we looked for backlog and the of The Our really North cost, see And America in as

stronger think growth here, international into visibility You're got as go 'XX. us most variation 'XX going a we've continuing we're now profitable but described, of importantly, provides and to element quarter-to-quarter, have 'XX, that here into really John look 'XX. we at I And to as

Sachs. question And Revich our Goldman from Jerry with next comes

going are time unfolding? thinking Tier on California can locomotives the standards? sub driving the do that wouldn't you is -- about on line flows in the provide Can and standpoint that process And drive and wondering you the mods with customer how time CARB that the you for regulatory just you line an And update expect from how the how just the new a proposed for discussions fit I'm your Roughly, you ebbs preference fleet? about talk folks to versus customers clarity and X are see industry?

Yes.

technically Jerry, outcome So X this not share for responded petitioned EPA request, EPA to fluid. for CARB has the for supports end, year. locomotives. well and the to for the support of in-use effective November, the say very role all customer our waiver outcomes. California's regulation positioned and waiver In I'd a became beginning ruling last But remains of we're

vast availability. the entire have regardless And our best good renewable what We consumption, able [ burn reliability, fuels. the low fuel and I'll lowest news bio ], is installed products, best-in-class base estimation to be you tell will further regulation, of

But exciting emission me they bio go near fleets, We believe breach to will goals. fuel. what's ultimate is and their firmly to ultimately can share beyond zero we newer customer renewable our more

We journey. our an hybrid eye our integrate combustion fleet. are And customer sustainability in really with and that enabling being into of testing batteries hydrogen engines. And newer towards fuels, part systems parallel, we internal aggressively alternative mix, ultimately in

we not So guidance. into our incorporated have change regulatory

tailwind that us. a So be would for

be should over Or about, depending flows of ebbs operations Super. there X% that are at years we rate plan? can CapEx should seeing that XX%. next the and I total like net run thinking from And rate as CapEx your at we then of flow is on about couple on just conversion cash clear the been The think cash you've that flow any to John? what income very over ask, free we're the sales, be conversion

period of of investment expect we a CapEx years we of time. entire the of our horizon ago, when over that So rest out that couple with range we X% would over look out came

Melius Rob comes And our with from today Wertheimer question Research. next

means a a give also goals kind bit think order if guess that wonder that Jerry's it's the generally, there's of what I little have for Just climate mods order in -- they're context. where similar there's they're for more had came total to sense I question, I just healthy any of was you number mods from us your but CSX through. perspective 'XX? And you can that California, the record And a on fleet in running fairly fleet of old that leave if even rails maybe we then and or a running. that aside old

So your in California? is customers with locomotives North America, of just that new think [ actually then mods how can get about just any around now your color and in level and with thinking right anything new mods? think to are conversations that with ]. Does their they to How about climate looking? how goals Maybe much -- without they balance

our the Rob, returns end invest day. for at customers of the

up to the coming their So of they've course, service to down, improve costs investment, got to here levels. really When they I we're that that opportunity sure drive it into think reliability continue just continues. the in I past. really at look trough here as look making comes from fleets, and drive levels to down And

coming 'XX. have into We growth

And recent gives order significant referred to the you grow still visibility us market. have growth greater just We really into to in continue 'XX. just

really oldest the think, as I we've we what had. have an fleet to rates grow with here I'll to closer we here think get -- call average opportunity still replacement I

that's in going decide here of regulation. of get invest be some most what flexibility into it. ultimately lower on here I emissions elements introducing to certainly that faster customers of we a call, by some But a shaped by I'll allows think to at the the look shaped technology think greater that I and we're could a really, payback, And elements bridge it's environment. importantly, greater payback customers how

question Scott Research. next Group today from comes with Wolfe our And

a revenue when mix just year? guys within about So or are just you or Freight And think Transit we not should better with all your expecting moving tailwind guidance, growth, directionally, about pieces think you growth? the this as how the within --

we -- mentioned looking be locals well, to faster And Great that the a again, mods question, business bit [ just XXXX. I've that And for in kinds of world, mix mix be into in Scott, little with of last of fastest bad the our Scott. to growing mix. put There's and groups and combined at And expect a ] Again, the there's we question. midpoint that mods look our at we and 'XX, Rafael average, rate equipment will reasons this actually, before, growing. And at as headwind X and said growth. this When mix. the both across look is of in out as in because bit than come. revenues revenue we mix the for X expect little down mix as a really marketplace for case putting decades a good assets we're to will the us that be good generating on

But mix there of a little headwinds going will good. forward. feel we bit really be So

last double-digit then any this just timing on the to And first [ -- bunch and in pretty are then want on Do And seeing we side, the Helpful. ] just I battery that about Okay. all growth think mod year? clarify, you've been consistent I have and the again talking years. delivery local of that? update you of mods

With regards in look XXXX. be to they'd mods the or to new up at on were they in we at mods, said other combined we tend new. we If digit double year, the X the than and look mods

to faster average just them the combined the of we than forward, I grow As look those grow as expect to than average. faster do we mentioned, had

here we're progress make in had. Scott, going continuing strong 'XX. So with And here the to visibility On fourth growth greater battery quarter. electric, to your on question

over costs biggest on driving continued We've with heavy think here battery these, continues year we're key we support a locomotive electric and fuel to As on you [indiscernible] adoption Australia. here X start some This expect there's pilots haul work focus I customers. and running for not ready power. to going -- of got this There's the a know, be demo do that we of that, broad on the unveiled number we And first of to megawatts on. X efficiency. really projects. opportunities be of in customers And while will

And Wells from with our next Allison question today Fargo. comes Poliniak

digital if I just expand seems been the on your like It want you slower. of intelligence that's could bit particularly piece in a to see North business, America.

any or drivers some from -- long-term of are investments there is a these Just the still off cyclical folks understanding pushing standpoint, there. color

on color that Just any near term.

pipeline one, by locomotive, digital here, think driven really you fourth driven What continues here, area the international saw the signaling short-term we softer X by I higher quarter, commuter for a to group. But onboard is railcar discretionary quarter, when is is say I'd really entering by U.S., opportunities and side, think I about digital be continuing telematics number on with the something also which the exciting and revenues I'd demand while from I convertibility strong, think more focus business. PTC, So what's saw say the during remain demand the really of and announced mine, think which to we tied us OpEx international, primarily recurring submarket. solutions. a mining in we

business. And providing keep X cars. And It market profitable are that tank X.X here this and a we'll freight opportunities for like data and a of this we opportunity is be is owners. real-time with million to growth a multibillion-dollar growth platform will railcar for car creating us, We proven us, technology. propelling where

how us color that? Just part should then rate of we on any maybe the you And pruning portfolio on Got any exiting was that could Is think then it. incremental? optimization, color there? about XXXX? cost And that run give

Yes, Allison, is John. this

the most the to X.X, performance behind us So savings And us. they're separate. of in are of couldn't investment most and of we front is be more date, with the Integration pleased that. of

of we exit had as we we as exited So million. million the run And will rate a to rate that XXXX, at $XX we exit XXXX, be million. run will $XX $XX

$XX $XX So they'll here from we in to equal ramp would the over years, exit moving somewhat million. the significant we be probably expect the to period. ramp X next million a And on million $XX as from

Ken with America. of Our from next Hoexter today question Bank comes

Great.

product gone but through differentials type, outlook. kind you've international And mix talk talk the how Within growing So growth Rafael bit or maybe is understand X% issues can and versus versus other? of of about margin your over to X John, domestic? kind you the us about a mix as the -- of

think reflect revenues, ultimately as at, I which Yes. growth heard look wants beyond especially stronger 'XX describing stronger international think pipeline, me to regard. internationally When I I we think that of you in

see we pipeline deals. So a strong of

Some of converting longer those which business. of we've to into strength the we'll see the this really that see year, got term part year, last continue them signed a in we'll backlog

driven. project this regards specific think to I by project I really with margins, mean is

an a than John there's rate both just I -- overall grow pace in at also faster business with As at growth mods headwinds but of new which think rate element described, still the associated business, company. a we locomotive the the

that X we a into maybe quick for can delve for my So follow-up.

it conversion, looks double-digit up backlog XX%, the Just up right? Transit is like building is X%. maybe backlog up the Freight rates,

is you're growing guess, X%. targeting is wondering, that we growth? The for -- I digit. What backlog do or How where conversion? mean the Just loss, a reconcile double X? near is the in signal their I that revenue good read-through

variation mean have of couple I things. a will quarter-to-quarter. here we So

out out, products. to got got Just we reflect that about sure And digits. on double the got XX think I I see months quarters some to How quarters of last and We on on single that associated you're that we've months run business, the digits. we XX making going X variation. really had times lead mean we have out, we've the quarters. low think with convertibility our built

sure making we that it's So that coverage. have

coverage, If Freight got like down. that to really think about really you if you've car things products keep build, in I especially 'XX, some specific the which in through mind, And flow be executed of need the is for the year. elements there's you think

So have about to both you do the with through play drive here ability But some the bottom elements have. and pipeline year. coverage out that to about still shrunk profitable is, we we the growth continue line the

from with Castillo And our Stanley. next question Angel Morgan comes

a in term. that Just longer maybe expanding bit little of on kind

Just -- about customers, more in throughout do book-to-bill up year color X? that like evolving? on any hearing new with see would your thinking As based what be the that below you above on But kind think locomotives. just you locomotives, of about How how in XXXX, will you your It you're conversations deliveries are X, be of the sounds there focused year. during for of from terms kind particular ramping your helpful. your

book-to-bill we be on back of and can time going we to from lumpy some continue expect to -- a So over these because mid-single the time, of them to our but multiyear. to average, are orders to expect digits X over future, Angel, be lot grow in the sustainable again, right?

in over over provide be. not forward-looking be So don't certainly what we it -- expect we're we But would guidance -- to terms book-to-bill we of time, expect a X.

how you And pruning any you then about. of talked here? you in the quantify that as that is of it. an on just perspective, kind Could of kind And from what was Got of kind opportunities of much guidance? kind the see or the -- impact that pruning portfolio incremental EPS that maybe divestitures embedded

Yes.

going the portfolio at And optimization, look on is that X.X looking overall $XXX carrying addition certainly, taking value not the revenue. hard we -- we're in are So about and the profitability at that, that or a helping that, But the when with at expect. the delivering expect company to are look and portfolio profitability. And very million that product Integration lines not we we're out looking removing of we weight, looking to again, drive focused at we're that.

revenue at you look XXXX. isn't So too, going realize, guidance, to in there when this to you that our got overall be

a your margin very Angel. question, that's low bit to we've little given. But headwind no putting or is So this on margin, answer midpoint of overall the that

And upward little percent. an upward but not impact our our down. going is on it's having bit a would revenue on pressure margin momentum bringing forward, we it therefore, profitability our expect on So

our And Jefferies. next Saree question today from Boroditsky comes with

the between into for M&A, authorization. is your buyback Can talk and you're this year? guidance about completing expected line So this about any announced time just authorization using flow for you how the the you in and repurchases the $X year thinking baked EPS billion cash share of this

Number cash X When you repurchases. more between long in to XXXX. pretty about with strategic at the if done of we repurchases M&A is we've bolt-on sound in look good be we as what pleased So $X.X couldn't do operating and cash free we will know, return Again, capital allocation, had would of cash on forward, that excess not, XXXX. of split And the track the balance are Saree, terms form in you share When we of million, in as M&A $XXX to we our it over as look shareholders repurchases. we we M&A. share share will prioritize have million,

In relationship had. it authorization, the that to replaced old we authorization the

year to be the got up in repurchases. determined opportunities. the have will again, ability what as And spend far we've $X that share to we in M&A So as billion throughout

-- your it say is buybacks But to fair this any in additional share any included that of year is that guidance? EPS not

Our the aspects business guidance use cash our includes as in XXXX. all well of as of

Okay.

it So does buybacks? include share

M&A buybacks, the cash, or that Share use of yes.

comment on Because have year, maybe Okay. on with strike. for you to hesitant comps question, number next the should a incremental of the kind but margin I I the And this in you're freight. put margins think freight easier absence know then of

exiting volumes You have and you're lower-margin products. higher

year? about think we margins can what freight incremental for So this

in looking look margin margins total. lapping will Well, for we Transit mentioned. And -- incorporated and portfolio looking impact right? productivity benefits of overall you we X.X the had, well guidance, been as are that's we absorption. to Freight on the look of So Integration margins at some we're favorable at at the overall, and when at in that certainly, that, out can some general, strike where optimization also our that as we're but side. certainly driver the When you a a in -- growth of incremental we're you what be company we figure -- on expect

Now going to that mix. be again, headwinds some to unfavorable on there's

And next Wetherbee today with our comes Chris from question Citigroup.

operator. into Rob you If you're sense looks more on rate doubled realize savings. exiting give bit further expecting on of rate basis This could a a dig to Chris. is that like you, it a cadence for X.X, to run us route the I the than XXXX, little Thank Can Integration run 'XX?

most up of expect wouldn't unusual We the There's levels and have forward. of that savings now And just all different Integration X.X, any -- drive to is make of been them that. Yes. executed. as start numerous aspect projects it

accurate So for be to look way That of will build. other more them. any modeling, is purposes at line than straight probably more

the you the revenue percentage on really but... expecting fine-tune circle half weighted any of And half? half, -- be to going and That's Clearly, cadence question us of you're it's to second of helpful. can of back Can kind about then the just growth. give in earnings Justin's to more first the kind versus revenue first you the

hard our get move revenue a But the again, just again, growth X the on would period other We higher tuned behind, expect high-ticket than the to bit in or delivery planned. items locomotives largely fine first little ahead of Yes. too you the some it's a how whenever few from half that. be second to or are deliveries we half, to have of

the second first the bit than that say half. revenue to suffice So half be little higher growth will a

question from comes And Majors with Susquehanna. our next Bascome

neutral for would American roughly much the impact volume to rail. your that revenue to locomotive have a service environment start about North talked contracts? You deteriorate How on meaningfully to

we be just opportunity in costs, continued here here returns. perspective units. are parking orders driving for muted And described lowering a It's of for than to that extent we more active place, invest call guidance. this included. the market X I you we some carloads That in stable. reflected the customers was our really -- by included -- we relatively course, America it, think what really into at have that the has I'll fleet We would just kept And fleet X So focus to have levels has, by I to really a year. not productivity, remain service -- been for What really us remain North levels think offsets continue is 'XX on expect units and from for the cases, favorable think, and least those being, service for as in got. see have place dynamics some dynamics the for you replacing,

international. to moving And

from you Kazakhstan, XXXX in buyout much about On not talked the impact that.

longer at term, that did this And would look converting term, just from to the a benefits overall where way billion-plus deal your of $X Wabtec? of structured of MOUs orders contributor profile? longer a to become when you is all As meaningful the profit accrue any in to

have the that think Bascome, as assembly an we venture. about LKZ I joint venture would

So would other on that lot A the it assembly growth parts overall side the make improves parts shipped was kits the things it world a CIS any there, revenue JV is were driving chain, the that of we does doesn't for and and the it. we of through the and right? were in our region. impact it into supply the have our joint were venture What of or in made lot growth of

is just supply this the now believe to in great control growth that going an a So gives chain -- world forward. over show significant of going we us operational operational area the complete

We have significant growth 'XX. in

of a Kazakhstan, for of us. installed We that manufacturing have that's I an footprint opportunity we have really to here -- significant utilize that significant growth element And strong some in think returns had export on 'XX. to outside just here top the and

with Markets. KeyBanc Capital next comes from question our And Barger Steve

do equipment fastest-growing you split marine if between kind group. But category that is growth and those the from be Are you expect you X said categories? outgrows the Or equal thinking locomotive pretty of right, mining, more drilling. evenly products? will remembering and I'm John, industrial locomotive

out We equipment look we mining growth at when as specifically, don't Yes. good XXXX, equipment. out group, as locomotives Steve. expect we break our both But it of well

Got it.

So rates, big X? the no similar between growth variance

they're I might variation it strong, again, 'XX. really internationally a through strong. of it's, driven challenge as Steve, here. have, But beyond and we think, go it. both lot a And We

for the does single transit that coming Got best with for side it. the low in tough and on more off year digit? outgrowing is single really And freight mean years. comp the consolidated growth a like digit equipment you're transit, guidance, services and And high freight

What specifics over X to We Book-to-bill won't you business for the Transit be year. tell closed continue for get ratio Transit, or the for Freight. strong. fundamentals into guiding we're the the for I'll on

to footprint. to business pleased variation should we're will projects. of and do While significant to expansion the Integration we that. to always with by have not the But here timing simplify in driven really significant will quarter-to-quarter, continuing progress This are margin we mix continue 'XX. work a on contributor deliver

to for back and session. remarks. this to over gentlemen, like question-and-answer conference the Kubacki any Ladies turn Kristine concludes I'd our closing

you, and for We look speaking Thank participation you with to today. everyone, quarter. your Rocco, thank you, forward next

We thank This conference you today's presentation. all for Thank call. today's you. attending concludes

now may You have disconnect and your wonderful lines, day. a