Westinghouse Air Brake Technologies’ fourth quarter results were well received by the market, reflecting solid execution across core businesses and strong demand in both freight and transit segments. Management noted that order conversion and robust backlog growth were central to the quarter’s momentum, with CEO Rafael Ottoni Santana emphasizing a 23% increase in the multiyear backlog. The company also pointed to operational efficiencies, with CFO John A. Olin highlighting improved gross margins despite tariff headwinds and a shift in product mix. Notably, the successful integration of recent acquisitions contributed to both sales and operational performance.
Is now the time to buy WAB? Find out in our full research report (it’s free for active Edge members).
Wabtec (WAB) Q4 CY2025 Highlights:
- Revenue: $2.97 billion vs analyst estimates of $2.86 billion (14.8% year-on-year growth, 3.5% beat)
- Adjusted EPS: $2.10 vs analyst estimates of $2.08 (0.9% beat)
- Adjusted EBITDA: $590 million vs analyst estimates of $605.6 million (19.9% margin, 2.6% miss)
- Adjusted EPS guidance for the upcoming financial year 2026 is $10.25 at the midpoint, in line with analyst estimates
- Operating Margin: 12%, in line with the same quarter last year
- Backlog: $27.41 billion at quarter end
- Organic Revenue rose 14.8% year on year (miss)
- Market Capitalization: $44.28 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Wabtec’s Q4 Earnings Call
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Oliver Z Jiang (Morgan Stanley): Asked about the sustainability and expansion of the pipeline after recent order wins. CEO Rafael Ottoni Santana explained that opportunities remain robust, especially in international markets, and aging North American fleets continue to provide a strong tailwind.
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Scott Group (Wolfe Research): Inquired about cash conversion guidance and the rationale for changes. Santana clarified the company’s focus on long-term cash performance, noting the removal of annual targets but reiterating a commitment to strong cash conversion.
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Ken Hoexter (Bank of America): Requested specifics on recent backlog additions and the impact of tariffs on EPS guidance. CFO John A. Olin discussed the inclusion of new orders in backlog and outlined tariff mitigations, emphasizing a balanced plan for 2026.
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Jerry Revich (Wells Fargo): Sought details on the timing and scale of the EVO modernization and lead times for new orders. Santana indicated that most new programs will affect 2027 and beyond, with a global opportunity of nearly 10,000 units.
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Brady Steven Lierz (Stephens): Questioned the size of the EVO mod opportunity and the drivers of higher SG&A. Santana pointed to the significant installed base and aging fleet, while Olin cited acquisition integration costs and higher compensation tied to exceptional cash performance.
Catalysts in Upcoming Quarters
In the coming quarters, our team will focus on (1) the pace of order conversion and backlog growth, particularly from international markets; (2) the adoption and scaling of new modernization programs like EVO; and (3) the effectiveness of tariff mitigation strategies in preserving margins. We will also monitor integration progress of recent acquisitions and the company’s ability to offset North American railcar softness with growth in other segments.
Wabtec currently trades at $260.47, up from $246.45 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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