Westinghouse Air Brake Technologies (WAB) 24 Apr 242024 Q1 Earnings call transcript

Good morning and welcome to the Wabtec First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kyra Yates, Vice President of Investor Relations. Please go ahead.

Thank you, operator. welcome First 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 Relations the and accessed today with tab presentation, our on website financial were wabteccorp.com. posted along disclosures to on Investor be earnings

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

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

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

now the turn to over will Rafael. I call

good Thanks, morning, everyone. Kyra and

Well, on Slide move against X. when creation and talked long-term we when progress I'll framework and that to value my XXXX. strong largely from our XX.X% we was adjusted performance, met, had by on quarter, John year were strong that ago from which Revenue by XX.X% Freight about sales financials. Let's driven Last quarter, perspectives the the billion, exit quarter segment. momentum up prior will Sales year. the we EPS cover then an increased versus And the was margin the and with growth up update start our expansion. momentum continues. was driven business, $X.X we

quarter $XXX multiyear deliver signifying our The strategies. billion. our million. total, progress We was the remain we to $XX continue XX-month across momentum $X.X strength customers to evident. and year. for business. against operations confident execute, is and momentum the to a ability continued to XX%, Overall, start from underlying growth visibility billion, business and was strong The was in flow long-term for up cash across our to make Total backlog the had In backlog the

X. to focus Shifting our Slide

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

up America down geographies. our carload of X.X% compared first are pipeline mixed, industry's while higher. this carloads metrics the our was strength by was our international year's to fleet markets quarter, North of While active and encouraged fleet last business the in Wabtec's business, despite when freight across opportunities the quarter, remain active our robust the were across growth we strength key of locomotive

As as for and see opportunities safety our we that we forward, look digital efficiency. significant and the reliability, drive continue technologies, continue in across invest in locomotives, to customers globe modernizations new demand to solutions productivity, fuel

American Last and upgrade be is across lowered reflect international markets, the strong to industry aging we supporting delivered, North the XXXX, which be prices at are Internationally, of supporting activity builds. to activity expand In has to about robust an XX,XXX quarter, to now mining, cars cars. infrastructure expected railcar pipeline. XX,XXX sources commodity discussed core Looking significant outlook the are investments fleet been and an to for refresh industry most the upgrade our fleet. and orders a by truck

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

Africa. business a with discuss order new for Africa. large with This, Next, to quarter. has in million business, mining million in team strategic the service few significant particular, to recent coupled aftermarket in let's continued highlights in million the in Slide region opportunity orders the we totaling highlights. strength Within $XXX seeing mining, order $XX in the we're QX, X turn the that over a for signed locomotives in believe exists signed we $XXX and customer a a Late

needs model Maintenance PT the KAI. new movers. tire customers, and for next was Commander of parts to railcar slipping generation And finally, reduce tractive launched wheel a extend the won team long-term NXT, effort, life. its of we the optimize In Way with our of specifically The Indonesia, designed agreement Shuttlewagon

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

to Slide X. Moving

is discuss Before of turning I the our want to John, key to it over making strategies, decarbonization progress of company's against rail. briefly that we're our one lead which to

unique Our position and on driving progress efficiency reduce team, emissions. fronts. our carbon the technologies industry on Wabtec in highly locomotives installed base advanced of fuel and to mind, this our X capable to locomotive puts we're lead With in a

to a of base is emissions using customers to their enable to transition locomotives. installed zero near First, our current

Our existing leverages customers' and our fleets infrastructure. focus here wayside

emission carbon can to efficiency. of carbon of improve up haulage And mixed fleets carbon renewable locomotives combustion the and when fuels. existing by fuel fuel older customers with modernized to hydrogen through portfolio also our up replacing the capable through realizing X total reductions We're bio locomotive's use efficiency XX% with with in and in to durability, the up locomotive reduction. ability, be and and to our XX% XX% along Tier reliability further enabling improved internal of engine, Our

In completely internal part a efficient significant or second to fuels decarbonization, our given best that hydrogen is And X-stroke of architecture approach combustion this provides and optionality for alternative of back if On developing it our diesel customers. not we're And not are zero technology use supplies our path this that reversible to addition, our economical. of facilitates engines. available we in emissions the approach equipment. our fact is we fuel locomotives have and competitive are the advantage the believe engine more

locomotive aware, a we Australia. haul to world's customer first in battery-electric the heavy introduced recently mining are you As

on later battery will braking customers' plan operate locomotive hybrid charge batteries. regenerative first to we application, they the this relying locomotive. Given month, And ship our to the this

for down investments Consequently, with hydrogen are customers' haul partnering we and by commercialization road. agencies cells heavy adopt We pacing with the heavy is the Finally, locomotives readiness our develop fuel powered farther cells. our hydrogen to government that we haul are to investing locomotives technology. fuel believe of the

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

everyone. hello, and Rafael Thanks,

to Slide quarter the the we see first Turning detail. first year. momentum in to experienced results I exited quarter, will last In that more as review underlying we we our continued X,

and both year operating growth revenue our in expected, full As were overshared growth growth. for margin QX versus expectations

and versus As the we the half last in second discussed we in quarter revenue expected both call, be first growth half. higher to the margin

Sales growth a groups. year. were half, in we $X.X growth While equipment prior billion, more Sales the the Freight first to at to it pace and our half. by increase the expect a versus was tempered in especially driven second we expect first be the services than for quarter the reflects XX.X% quarter segment, which the much continue in

were XX.X% quarter and operating than increasing a a share was points quarter, points. grew XX.X%, year in an This the X.X slower higher percentage $XXX of up diluted our was driven X.X operating percentage versus improved earnings QX GAAP margin increase the driven at and For percentage margin points Adjusted prior by QX which revenue, rate improved expenses, sales, GAAP the per income which by driven first management. by up year. $X.XX, was million, was focused margin operating versus gross additional ago. cost margin gross by X.X

and operations. portfolio were quarter, related primarily restructuring, Wabtec's optimization X.X the charges of further our integrate to had to During $XX and our initiative streamline pretax we million which Integration for

revenue As drive million XXXX of you to reducing X.X run roughly million low-margin, initiative may $XX $XX manufacturing rate while is of by Integration portfolio our recall, $XXX expected optimization to nonstrategic savings complexity. million eliminate and will

year. prior underlying In diluted XX.X% the solid Wabtec strength share demonstrating another business. quarter, earnings adjusted $X.XX, versus quarter, Overall, the per up delivered of was the

X. Turning to Slide

Let's in lines product review detail. our more

last in North of last first of were of our offset from up sales mining and deliveries quarter L&M revenues lower driven Digital sales but partially sales up the year, of industrial experience XX.X%. railcar Component First lower in do driven American acquisition Intelligence North see continue year, QX where increased build. products, our products sales X.X% locomotive international by we and of from onboard down were sales late digital last new we growth quarter American next-generation equipment to market year's in by sales sales XXXX, by mining. XX.X% consolidated XX.X% higher were up and locomotives. higher Equipment were robust versus

Our growth services by significantly parts sales. grew year-over-year and overhauls was increased Services driven XX.X%. mods, sales higher deliveries of

Transit continue increased to recognize the infrastructure. fleet. our reliability the urbanization customers superior behind X.X%, positive products such the as and remains secular and and Our accelerate as sales our investments segment availability of The sustainable in segment, for in decarbonization need performance, our momentum in Transit services businesses. drivers growth Across

points Slide to moving up and were during XX. Both percentage margin adjusted quarter. Now gross X.X the GAAP

mix favorable higher to was mod new improved despite benefited also loco within gross between Freight Mix higher margin and sales, segment the favorable in deliveries addition segments. pricing the quarter. significantly from and In

benefited fixed costs the favorable also cost digital we from and against quarter, first from development the absorption as X.X of well next-generation quarter Integration as in higher comparing XXXX. During benefits

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

Turning to Slide XX.

lower For focus expense was points operating revenues X.X last X.X year. down a costs. we expenses SG&A $XX than versus last strong improved of GAAP as percentage was operating margin with GAAP which Adjusted higher points the margin Engineering QX managing leveraged were modestly million, to percentage first quarter, a XX.X%. sales as XX.X%, adjusted and up percentage was year. on

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

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

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

next-generation lower percentage was margin and the Integration improved gross lap same savings increase in time, At were X.X by costs. we SG&A our revenue. behind improved The operational year's of execution, development digital expenses and last pricing, a mix, as strong engineering driven investment favorable as

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

to XX. X.X million. $X were X.X down segment to points million, million margin as sales adjusting X.X% segment Transit and percentage XX.X%, were operating unfavorable currency, QX. restructuring percent Adjusted $XXX million. was up savings. costs, income to by by X.X%. GAAP in up income Transit year, for revenue operating Adjusted input Integration of When $XX Slide operating mix sales X.X $XX higher related were partially Turning was from last offset a foreign costs Integration was driven

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

our Now let's Slide turn to financial on position XX.

flow First was quarter $XXX million. cash

During securitization cash higher funding. quarter, working earnings, increased from benefited and flow the capital improved

the expect continue We XX% for full year. to than greater cash conversion

balance end was year Our continue at quarter, at of the was be with net quarter same which debt the financial And ended to X.Xx quarter ago and sheet debt billion. versus $X.XX first leverage leverage. liquidity a strong. position ratio our the the of favorable We X.Xx

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

During of per recently year. Board we increased and dividends, million million by $XXX Directors, was the versus of in which quarter, our XX.X% $XX share our prior up shares paid repurchased

the talk guidance. like financial XXXX I'd about that, to our With call to back to Rafael turn over

Thanks, John.

turn let's discuss year XXXX XX Now Slide to updated full our to guidance.

our As a that start continues today, the solutions across business. We our for customer products very demand year. heard delivered team to the our strong underlying and you've believe

and profitable Our orders strong, be XX-month for continue pipeline growth providing the ahead. backlog to visibility

$X.XX mind, midpoint. and we up and of billion the to last X.X% these up .We EPS midpoint, $XX.X increasing year our XXXX expect $X.XX With from XX.X% at be per factors are about the share, now adjusted sales at in between previous guidance

expect continue be to to flow cash we Finally, greater than XX%. conversion

Looking Wabtec that ahead, is beyond. drive profitable and I am positioned well to growth confident XXXX in

XX. Slide on up wrap let's Now

Wabtec on new intense locomotive As building growth our team, returns. sales, on cost drive technologies is focus underlying With base, visibility modernizations, resilient momentum in to continues opportunity well in continuous profitable demand value you've focus our heard solutions transit continued and world-class we backlog our maximize long-term our stakeholders, digital our in large we believe in in the across with through positioned have our Overall, portfolio, long-term to in solid deliver for today, continue part innovative and management, to an customers. improvement installed increased team and and growth shareholder thanks significant systems. to

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

Thank you, Rafael.

We Operator, questions. first our [Operator we are ready will to for Instructions] now move on question. now

[Operator Justin Instructions] comes Stephens. from Our first with Long question

big was the versus margins what And wanted rest the John, if saw So if quarter, operating equipment how anything of I revenue as think just business progress part margins. in this I year, can just surprising of Or sequential was XX%. baked on that the fourth the expected there's the freight in And you in the what's share to in freight that the drove quarter we leverage the improvement? ramps? over to guidance anything speak are this the this most there to unique quarter improvement ask does to

Justin, guidance of our talk that Justin. Great, execution in guidance down expect to over percentage the continue. feel those the X.X year increased expect but way margins year we was that great would we our are course margins guidance. bring are there half. would going building led freight the about last on percentage pieces. there to the a about do -- productivity, look points, operational from the specifically, that up very couple good But we from let's end overall, a is the going margin, are to When the at the X.X One, freight few We of points. things back it up There not this

mix in the look mix be unfavorable turn half of we When half. other the in at very to mix things. a expect we was and do couple first back One, favorable we but to favorable expect

the on drag the a margins be year. will bit that of a back in So freight half

growth fair such rich is segment. more be -- or growth back expect Freight XX.X the was expect to piece We neutral of don't there the therefore, year that absorption of the in have that second we the half. in The of XX.X% a the given to amount quarter half back revenue would the the and

the a Justin, Freight lapped onetime during about finally, development margin first we ago a year if the our quarter quarter, PDS then you And period, that year, the lapping And the we more of adding for next-generation in digital investment remember, of made enterprise the overall to of group. bit as the this that so in little that's X/X benefit overall, in software.

half repeat. So to same we the we again, in quarter. But you're the the first not the we of margins as don't as back up expect just to seeing in expect that extent but to year freight, look be

thoughts I Got comments But around And locomotive due Okay. you could conversations color were public have impact it. on had timing recent business the any initial CARB. the you've decision based know this of proposed we on the proposal any current if the I customers? EPA week. guess, quickly And to how your that pass, have a regulations that around does earlier of the front? from some secondly, final with the do on this

you're mean, right the public They period public Justin, last I comment a was So due Monday. hearing. had there.

think outcome fluid. the I'll say of I rule here the remains, quite

here I truck manufacturers standards by vehicles, gas got through EPA We've fleet. And the is, defined there. support tell EPA ultimately We've XX% reduce So reliability, the new outcomes. to and is, for One the value recently very for what highway the thing got the to also that, the heavy customers lowest customers which want that best-in-class transitioned well best would as emissions, you for requires also liquid be highlight for finalized combustion that be that the we're using internal oil. positioned greenhouse call zero important to consumption, emissions, really here for availability for this products. fuel And can all it I'll technically I best lowest cells the this into help would plays hydrogen internal engines allows think, well use because engines some of transition to as despite of near ultimately. first definition railroads installed reversible base, to our period. with fuel classified plans to zero solution which this to emissions combustion through But a our hydrogen is I emissions out zero

Majors comes The from question Bascome next Susquehanna. with

than less more equipment on follow but subsegments, a to of of modification about year just of into side to to or as relative absorption little it longer-term some up John gross to long the Just in context XX% able not that, typically just the a that profit view growth drive guidance lower this Can or how talked about some meaningful you being the favorability mix and fixed the was your such of that the in go services Rafael, of incremental deeper businesses cost you margin and how mix you've that bit bit term. XX%? little your the long-term given a be expansion,

let we've we're on business. and and in the the comes quarter through the fundamentals now strong had the start commitment Bascome, and confident over strategy. I and of here robustness mean a the the hopefully years of here, because, me #X, performance this team's last

I think innovating. we're continuously

We've mods some in market even been of key ensure that's changes We're we our think some to if pipeline of results. to adapting these to locos. tangible into convert these think I you been about or piece, really continuously actively a new growth a opportunities managing trajectory. remain

steps arise we've process. take think I in challenges proactive when also continued this to

John let that but to our business. highlight growth of here see and continue going over profitable you're continue specifics to to the on time results the we're to the yearly the confident comment in half. in I'll important quarter drive to quarters, it's ability think I variation on

it a locos off long as money is are headwind from we at for we we're comparing year to mix puts it mix. when going And to look expect ago asset of a out look and the again, well talked the make because good the provide we're this over mix favorability in, in half, about on first an at of come. getting and mods to locos we there good quarter, we bad mix term, and look in if mods we nearer to decades actually when this. There's overall Bascome, some would and mix the first Yes. we because really more But period. -- that as what

in an was -- talked period, back ago delivered we half the that was If that about X 'XX international as you of of we the we that remember market. the into moved 'XX margin low order half had front year over quarters, a and very

providing that and in that first some the seeing So of that's you're just mix half. be will the

again, we'll start half. I in back to the And Justin, mentioned as reverse to

significant due last profit like the quarter be as but of year, first the do mods. majority overall and our production about the to those talked locos out, the think, growth point of I really and of thing of And revenue our Bascome, this other year. we to at in I'd we the this expect look to the the cadence we is growth half

our versus came significantly the in and of the year. aim our first that the we more locos production. or year level of As this year the mods and half quarters the lower in being had deliveries we of of production last to load is year out back And half the strike, our

mods first the leading see with in revenue margin we half. an terms is the be guidance the be we of and the that mix first improvement of expect to in and in unfavorable the shift half. and into and we a going fair half that, basis, in And to we that well first as that level back down will XX% the first to about. to And half a the half, the in year overall, And favorable more about expect half, that's favorable growth. absorption growth amount do of much more on which growth growth the slightly margin the we that, a bit little year-over-year talked is, tempered with in delivered, When half. for look but deliveries revenue up So back come revenue a at what locos again, back we than at as for is it in profit both

from next The Morgan with Castillo comes question Angel Stanley.

quarter. solid on Congrats a

talk of deliveries terms there wanted in performance impressive. alternative Just for your of to about slide, fuels some your very is and strong the half decarbonization targets the just very second

terms of these just curious, of of you you about are as benefits deliver of to these making your in XXXX? So have is order and into of with savings. and customers, conversations what of that then as half flowing patterns kind kind think in or you're the overall about improvements discussions, hearing expectations enabling that you How some some we think impacting engines second

Yes.

has #X, really efficient there. So significant part really a of strategy couple the part a customers. and most long-term sure this of our the making we on fuel of comments been fuel have for that a is expenses

So we there. continue investments those

able think some opportunity of the take to I in internationally America, there products the have And we that I well here. to just market. mods. really North And a playing playing transition believe of And I and to the also We both progressing do making and to is I'd our that We core best really we well. be we're opportunity known in customers like not see the renewable and Tier of say, think part that is as the advantage to see significantly continued of there advantage welcome are the Xs and solution. on sure on hydrogen that engines, products carbon biofuels take take really emissions. prepared from both ability reduce here

zero later we're this Australia, haul we're battery-electric call, year. we're that's of very to to going elements with I technologies, and with this quarter hybrid also year, the positioned really also that, well units some on, that the first, the last we delivering we're But to locomotive transition. York of what the which heavy New unveiled delivering customers working start So emissions which through support think I that

our as the with continuing as of to for we in adoption. make our transition. very here that, provide make we sure that -- well agnostic with sure as to and in positioned that that, of agnostics pace But we're, through light So really some to we're customers reversibility can make regard we that investments we try think I engines

for first then over strong Very ability shifting kind we buybacks about allocation, the kind that the and Or strong balance we -- as of cost how think the and helpful. How performance talked about to quarter, there's should you the the management. of potential bigger just in that that around strong capital deploying but And return more cash? full kind expect about you capital to performance you for -- cash of to are sheet the of the dividend other shareholders, seeing to raise think you But the your have should shareholders? kind of year? of outlets

the accretive of form if can find repurchases the free that, feel say return zone low we first cash to purchased. the of is, towards that we #X that looking -- of for And with in our expect M&A, we're good repurchases when good will we've cash, we'll with $XXX net we that return and M&A. -- we year as Having shareholders free this -- not, it's that point I then in we X it. if fair want to the debt excess if cash about right, the X.Xx said Angel, ratio, to will year. throughout leverage And shareholders start strategic our well. we're comfortable that But the the balance got amount generate, we share in million feel a cash we and where sheet at excess with it's Yes. terms cash our all share of of prioritize end to we the the But the of prioritize year. to

Scott Our Research. next question Wolfe with comes Group from

trends year? of is going? wanted pricing the numbers how the Yi can for pricing out any about give of Ivan here. I you talk you kind know pricing pricing core And sort guys for touch the expectations what on to of but are I don't really Scott rest Group. directionally are This your this on

we were was and pricing when Ivan, pricing costs at in the our favorable. overall quarter, slightly up look slightly

And bit a margin little improvement the of so -- provided helped quarter. that in

The comes with Matt Cowen. next from question Elkott

Rafael, was a increasingly. but behind fleet How the railroads I And mentioned other thoughts already Is was that much in is factor what that? locomotives in just up. we any locomotive America Optimizer industry helpful. matter Wabtec are of coalescing North a you would Trip think Wabtec on down this know, be

So think, cycle units element how think engine that's mind. of, certainly it, #X, most the are it overall that done I efficient those to mean, that be to I And keep there's got our have that time been first, provide you I in really that an I'll and cost over life fleets call those investments fleets positioned have at an level.

So it starts there. continuous. It's

drive our get the the ability customers but support those made to not just fuel we've ultimately they customers over comes with network the an that what our the that that. and fleets of those ability got to our on availability are improvement over service and those and and to you reliability that to on across support team get engineering time to call about continuous service really really time And able we've think fleets, globe investments so significant If I provide units. efficiency

we that of really elements the fuel made need. to improve top continue make help to the and efficiency just the to not the elements to various we've improve that, improve some include safety but they On of and investments you digital of customers

make validation we investments really of to is to a this differentiation continue we think I the and continue create the So in product. the

question. And it. just one Got follow-up very That's helpful.

optimize could February plant an this year revenue that the at John, you back on mentioned million think update tour, in that? provide of Could I margins. discontinued you $XXX be to

new we Yes. strategies the higher as the low that next X.X%, out right? given fact through this move our of Matt, that with The is for of, the of at different when guidance year exit that we're majority look $XXX exit at We're it margin actually taking some from I'd will lines. of million. moving revenue call we're that, year will but into business, product forward out it So midpoint that come working than

Revich question next with Jerry from The comes Sachs. Goldman

This on question on you in had the last Jerry. years. segment. Transit is is steady business you of now complete? for improvement had the -- view margin operational bulk in Clay couple Do the We've the Quick of over improvement transit the

we No, don't.

In business. opportunity continued to fact, growth here the there's drive profitable think in I

First, some quarter. comments in the

We X.X significant think one we in of were footprint, the we I line are overall expectations some end, Integration the we them OE and to sustain those savings. there by work the had to in were, that very and pleased the offset was growth. improve they some while further had. had has simplify higher the of business that But continuing tied much are with costs to margins. high with And progress input

you're to being So we're to to in committed expanding differentiation to the I terms that margins, selective taking variation products the terms provide continue continue tackle, the we of team but more going able in think much have. drive action and is quarter-to-quarter profitable in the we opportunities see to here growth that very of too,

for of based solid line, And lines sales couple in book-to-bill same along you've next segment now growth the bids, sustainable while the years? transit top over your upcoming for is the what of on level had a on

there. longer of would keep being the in at range more emphasize look a But I book-to-bill It's over continue that range in we first mind. to a that comment the I we terms it's as about there. -- probably selective it and more we time, should We to term and And are out opportunities us X%. made probably of see just favorable X%

with Boroditsky The next question comes Saree Jefferies. from

This James for is Saree. on

wanted to alternative on So fuels back here. I go

mean, while rails cost a are -- efficiency I reducing are also play critical think role focused COX emissions, So rails I think and on fuel I here.

you such about using fuels kind So can and economics the of renewable? talk of alternative biodiesel as

which to piece Uptake key could vary, the globe, that And customers. I the think flexibility call really on ultimately I'll sure of, got our making a both subsidies, we've and elements across been that of play really support the there. that's strategy, depending is out availability that

government to you in that's potentially to it might an of might ultimately renewable some the have a you that So playing might you parts where a that. in play have in the country, hydrogen country, all of you part might creating role. how have you right sure support available agnostic have seeing engine make diesel it, not terms we're of And areas certain also

plays the into some And really I I in again I'll that's being technologies, you maturity our the ultimately lose of sight terms transition, opportunity think but hydrogen It to you customers without the cell what in technology. replace, could -- get of and look lead adopt, at farther emission reversible how development don't the as terms key making piece And sure which which to. the into call we of of terms in higher help this much over higher time of our zero of to plays of utilizing battery-electric. and needs it with economics some mix, are call that a technology the fuel those out of that, to

I follow-up, the back a kind margins of as on it. wanted to Got And again. go

Day, X a strong given margin So in like bps But differently despite, more long-term Or temporary expectation bps half, next for years. to you about expansion? about Investor are target? margin XXXX, like XXX the for still kind kind of of of XXX looking to back margin such are thinking margin performance in by you kind the back talked in quarter first expanding XXX the you XXX

EPS year that Yes, of industry. believe digits James, this within longer-term the has performance look changed the based the business, side last view our on as we side. mid-single double of of and and our forward in performance industry we we see revenue our or terms the in on Nothing the digits year on

think in to we there opportunity should I just And margin profitable growth and note, expansion. opportunity same continue is ahead. we ongoing both see the the efforts. I those drive half-over-half internationally. important. [indiscernible] North auto America in And at piece, and combined on you're that's the an And variation, I think have, the both integration quarter-to-quarter, lean don't here whether portfolio to think momentum to optimization but both us here it's strong things I mean progress going sometimes the again, pipeline, enough, X really for provide talk initiatives, revenue it's

America. Bank Adam next comes with The Roszkowski from question of

cost an on you on and Adam for update million by A you question are run Could rate XXXX now? Hoexter. to the where Roszkowski It's John. savings provide for Ken $XX million $XX

when cost Yes, a kind a that, $XXX $XXX million, that's up And from and standpoint about exited million Adam, we that exit run $XX as year X we million $XX cost of first from XXXX. million savings, look mentioned are that in million we as are the $XXX are years. -- of to savings at run we million the rate what we we $XX at Adam, to we you And runway a of standpoint, base to down XXXX. million of the with a were ramping realized $XXX we expecting

million, and have expect would the and expect midpoint, well. escalation million, that to phases the $XX are all and as $XX we $XX over an most But of of the linear. are whatever in of the execution of be next some couple midpoint million, somewhat actually years is approved completing would projects So the different been

And would the savings years. expect next over ramp to so pretty quickly those we X

Helpful. And and given commentary. kind half profit half, second of margin you've then X good some

of the bit? of was year-over-year that a Given out into the freight Any quarter? last us off from about item. you second drop impacts margin color gain of onetime same expect the we to of you give Should magnitude called that year, kind sort due the elevated to could there? continue Should expansion X/X

in expect we half. seeing from half. the -- perspective, do We growth, at the expect would back preponderance perspective, the look at the Adam, first but half the again, the in we of And a that growth first in first to level When not that growth be Yes. growth we're nearly margin revenue -- the half. be talked aided And in therefore, the the And second half fact first P&L in going significantly as is going follow that. is the and first mix be half will we've to be of to favorable is leverage the by that will revenue about, majority the significant half.

a So grow see down it we revenue step the step growth, in and the down growth. see we'll will margin will in a

revised about that but tempered the But a then shifts margin we've good that. as certainly think based quarter be we talked more half quarter, on at the good will well will be again, mix basis, expect the And at full about. we'll don't growth revenue will year growth. the guidance as second growth it to again, at it I look quarter, back same we we quarter. a or level exit a production When strong be made, of that on we've feel and the second our be

comes next from The question Markets. KeyBanc Barger with Capital Steve

cancellations additive If we locomotive do driven get anticipate backlog? would that to changes, mods? think change orders Or domestic regulatory and an be all by cycle accelerated for would you the would you

be there's choice a really -- customer-specific. to I it's very certainly but made

to wouldn't on be fuels. that do the necessarily regard. that certainly not newer I forward would there include thoughts we cancellations in take ability be of would those technology, But expect say element not an complete moving So in of as alternative and especially I that really more the a technology, reversal towards with there

with safe the they provides customer over really that call to think I reversibility net transition the time I'll need. the what here,

hydrogen Understood. And on Rafael, conversation. the up following

expectations? investment come this but hydrogen years? to say, equipment times pacing market see of adoption level on call, several Or track is you beyond, Wab next, also said it's just up kind more hydrogen rates to mainline do that and X equipment is to on within expect set the You XXXX

be, if I here call in So combustion X create be corridors hydrogen potentially to the into an comments. both there going do fuel to alternative that government to you could engine. element I'm introduce where might tested some be internal steps an able and as to expect

that That utilization, irreversible your with technology. and down is around more If the cells. goes question goes road XXX% hydrogen later that's with fuel

a going take time to that. on more that's So bit

not midterm. that's the near or in So

about I wasn't can a say, technology legitimate even that about you in, was piece thinking years? just on freight X adoption. of there? XXX% the the hauling have equipment Yes. thinking I track idea the Is

similarly. we today that that So LNG. We with do do

you to mix a have We engine that's have an XX% LNG. able of [indiscernible] up ultimately that's, to

to So any complete you're if on. with still able lines. the running or think the of current you as issues fuel along same time, mission there, there's you is not the should same engine At have the availability that you're

So I corridors expect you niche going there. could to I still could some even be see think experimentation think application. but be some a to There

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

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

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

now disconnect. You may