WAB - Earnings call 3 2023 | Westinghouse Air Brake Technologies Corporation

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Operator

Good morning, and welcome to the Wabtec Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded.

I would now like to turn the conference over to Kristine Kubacki, Vice President of Investor Relations. ahead. go Please

Kristine Kubacki

Vice Good Quarter operator. President and to and welcome CEO, John Thank Earnings morning, Call. Third Senior Olin; John XXXX Santana; are of With Wabtec's Finance, Rafael Mastalerz. you, CFO, everyone, President us and today

our along on to our tab wabteccorp.com. earlier slide Investor were presentation, and disclosures, can our Relations with Today's today release and earnings financial posted website accessed be on

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

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

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

I will now turn the call Rafael. over to

Rafael Santana

good everyone. morning, and Thanks, Kristine,

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

and growth, strong another volatility quarter, delivered expansion despite in these We and We and robust uncertainty increased the evidenced sales cash achieved economy. flow. margin increased by earnings

$X.X operations billion, Cash was Revenue and performance inventory improved driven segments. versus higher Freight prior flow both was driven million. by Sales were strong up was from cash Total and earnings Transit was the which $XXX from XX.X% year. by generation management.

financial our remains position Overall, strong.

shareholders. returning to allocation maximize value shareholder cash for to growth our framework continue to execute and capital against We by investing future

XXXX. and billion. multiyear $XX.X The across XX-month backlog backlog was into up continued $X over Total visibility signifying billion, the business XX% momentum was

behind quarter solid a the Overall, delivered Wabtec team strong execution.

to focus even delivering and profitable the environment, growth more underlying and against for believe volatile well the encouraged ahead. our by team's across momentum ahead, positioned And is both the Wabtec I'm we uncertain drive macro a customers. business on unrelenting Looking

our X. to Slide Shifting focus

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

international activity our encouraged across we While markets pipeline of continue mixed, be momentum, key our metrics robust business to and opportunities geographies. in Freight by our across remain business

resulted North America Yet, parkings our carloads opportunities continued up slightly drive reliability, digital to locomotives, be safety as we in which customers for last across to see the levels. solutions invest demand down from continue that and and to solutions modernizations significant the productivity, in locomotive quarter, in efficiency. globe new continue fuel in quarter's

at continue to growth. The Looking demand is railcars outlook delivered. about Railcar industry be for American the North cars XX,XXX for build, for to XXXX show

supporting expand markets and as Internationally, infrastructure upgrade activity are South international is orders pipeline. Australia, and across America, strong a Latin investments Significant such core substantial to Africa Kazakhstan.

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

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

a to to Slide Next, business highlights. discuss X let's turn recent few

we strategic and for operating $X the signed significant During This agreement equipment KTZ, driving billion. lowering Company state-of-the-art a freight MOU with over costs. support to the the National Railway growth and quarter, in productivity technologies, Kazakhstan will

a on be collaboration locomotives drive of agreement to we of technologies, which includes and number expect delivered in orders long-term a growth and to supply framework XXXX, This XXXX. sales digital in a all strong

achieved the business by significant its just Kazakhstan, Speaking a locomotive. XXX of in our delivering milestone team

the components team Latin won versus last the totaling business, million, in Yet America team quarter, digits Mining which year. $XXX our at fourth is double Looking in up signed orders our over early Transit locomotives to XX New in supply York North to an for order City additional XXX XXXX. we order for subway cars. In additional an an won delivered America, in be

in to track. our mining. is start. quarter, heat This is transfer Also, the off closed on acquisition The L&M expanded late last great we a portfolio that integration

market mining plan, revenue ahead is taking globally. advantage of strong quarter a of Third

XXXX. in I'd also back highlight we Nordco, which acquired

of maintenance be experiencing business of double-digit XXXX. way to and ahead growth plan continues in is Our

driving our the continued on of relentless team's the we're focus business, this momentum and demonstrates the strong customers across executing pipeline on. the for All of opportunities

growth our innovative scalable capture customers' with technologies and needs. Wabtec that addresses pressing is well most to positioned profitable

X. I'd like discuss Slide our markets. detail more international to Turning to in

While North renewed portfolio our base, have America fleets to installed growth significant we a provides superior us foundation also by refresh solid technologies. leveraging a international for opportunity broad and across and

the time, last have has We our expanding X.X% annually over successful roughly installed base at which X been international in years. grown for

the in base. result, installed as our opportunities a strengthen pipeline and international of markets continue expansion expect Looking our ahead, we in to continued

intermodal safe modes and mining, for clean, agriculture transportation. need increased the Increasing investment volumes in freight of continue to drive and from efficient

in expect Africa America, driven from and by partnerships. and CIS, key growth South like footprints regional Latin Australia We our XXXX local regions

Our for are customers reliable delivering operational solutions, technologies which will more our reduce fuel-efficient, world. the around costs

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

John Olin

and Rafael, everyone. Thanks, hello,

delivered third execution will in We and the increase year. driven by were prior of momentum good which both were from Transit Freight I Sales coupled X, underlying great detail. and growth performance the strong the billion, quarter strong results third the for quarter $X.XX our from Sales team. segments. across Turning operational XX.X% reflects review a the business, more with another from quarter financial to across Slide

at was the improved during versus cost was and management. increase focused For significantly higher Erie in operating by $XXX manufacturing The X.X sales, higher offset the facility. prior up operating and the management, the cost million, QX quarter was income margin driven year. driven percentage sales XX.X%, productivity driven by quarter, GAAP our partially Adjusted strike by by points inefficiencies

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

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

quarter. momentum the another outperformed And expectations, quarter, are the fine-tuning as underlying and by we delivered up were our full guidance. our earnings $X.XX, result, increasing demonstrating per earnings our Overall, sales and a strong In We adjusted year. business. prior year outlook of the versus adjusted Wabtec share diluted XX.X% strength

Slide X. to turning Now

more detail. our product review line Let's in

quarter Third Equipment which last QX with sales, XX.X%. very XX.X% year along demand planned, were mining locomotive skewed products sales were versus due consolidated QX, from for were up quarter. to increased strong, as to significantly up higher this sales

for car XX.X% Components million. driven second by sales increased last of by products. year, were build quarter railcar North sales, with largely OE up also gains acquisition versus and benefited the along in product in share from demand American Sales the market $XX strategic industrial higher late L&M Freight

by North American signaling in which demand higher and offset Digital our Intelligence business, mining. a softness sales were partially for down onboard international year, driven next-gen X.X% from products last digital locomotive was by PTC,

driven modernization Our deliveries by Services and sales. Sales grew part was increased sales XX.X%. higher growth

increased customers and the Transit Our significantly aftermarket of our growing recognize and behind sales Segment Across up segment, of reliability, disruptions supply last to XXXX. QX cyber million sales performance, in efficiency superior chain the execution comparing and continue fleets. $XXX easing were XX.X% backlog, OE locomotive year. across availability Wabtec versus our impact their to against

sustainable decarbonization drivers core is strong need in investments such infrastructure. this in the urbanization as secular markets accelerate our segment momentum as and for across The

X.X percentage to from was Moving improved down sales strike to percentage related last gross driven productivity, gross inefficiencies XX.X%, X.X partially in year, GAAP and QX higher was which Slide points points XX. was by Erie. offset adjusted profit while margin by the up margin

favorable, was a Mix mix between by within and driven richer segments.

while still year-over-year material on basis. costs, flat Raw largely elevated, were a

third X.X our points quarter gross Foreign million $X currency and it by $XX exchange improved or was favorable percentage to million. sales by profits

and absorption Finally, more X.X, were fixed than at of costs facility. manufacturing positively by cost by inefficiencies, benefits our manufacturing favorable offset impacted Erie primarily Integration

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

to Slide Turning XX.

GAAP points For last quarter, operating was the XX.X%, up which X.X third was versus year. margin percentage

and improved as we Adjusted While to higher down percentage on a sales adjusted X.X as and versus percentage margin year points GAAP managing operating SG&A the $XXX sales adjusted strong points prior million. XX.X%, leverage X.X focus SG&A was were costs. of percentage XX.X%.

with was last $XX Engineering flat million, expense about year. QX

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

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

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

by manufacturing percentage Adjusted operating at fixed at sales, SG&A year XX.X%. driven as percentage the Erie. segment cost improved by in higher of increase by margin was and points X.X driven including lower from a up offset significantly The somewhat prior mix, revenue was and the strike absorption inefficiencies Freight

down year. Finally, QX X.X% from segment end billion, multiyear backlog of the was $XX.XX last

orders and for same continue We billion into XX-month up XXXX. $X.XX to locomotive billion, period that we XX.X% totaling was The modernization received shows in against and backlog XXXX. momentum the well over compare the good multiyear $X.X

up to sales adjusting in were for XX.X%. operating related Transit operating Slide million, million, QX. costs Integration to When to sales income segment foreign XX. XX.X%. million was Restructuring segment was income $XX Transit million. which Turning XX.X% $XX $XX activities up were currency, up were X.X was up $XXX GAAP Adjusted XX.X%.

cyber benefits impact points from sales, our as QX in XXXX. XX.X%, a in percentage increased operating This operating the from year. Integration favorable X.X adjusted income Adjusted last margin higher and X.X up result of resulted activities mix, of

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

XX. let's million benefited versus Now improved Slide prior operations QX was in management. the financial position higher from flow million Cash year. earnings inventory and to on cash from turn our $XXX $XXX

the was X.Xx leverage which prior at debt end of Our was quarter, year. the ratio favorable versus third

we've share dividends. shareholders And capital of year-to-date $XXX returned million through back repurchase to finally, and

down cash During the pay second quarter of L&M the XXXX. we the $XXX million after reduce utilized free flow to of in quarter, acquisition and third leverage debt

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

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

Rafael Santana

John. Thanks,

our XX guidance. customer Slide financial XXXX the for continues. demand updated to flip products We that our Let's underlying solutions believe to and discuss

continue pipeline macro despite solid top Our and XX-month line and to is margin The committed in expansion backlog growth to driving team orders environment. XXXX ahead. strong, providing for challenging a visibility be adjusted growth profitable

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

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

confident in growth financial XXXX, last profitable to while which has uncertain that ahead, drive aligned Wabtec framework. environment is our quarter, I'm the more become is the long-term Looking over well positioned to macro

let's Now on up wrap Slide XX.

delivered another on the a dynamic and and team our committed rigorous long-term our our framework are today, value-creation we strong quarter. to positioned drive returns. heard is delivering on innovative installed solutions of Even portfolio, you resilient As maximize shareholder growth focus well execution. in Wabtec environment, through a profitable base, to strength

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

Kristine Kubacki

Thank you, Rafael.

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

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

Operator

[Operator Justin of Stephens. Instructions] from The first Long question is

Justin Long

Congrats the quarter. on

the the wondering was So quarter. step we the in in was but I sequential implies the if quantify fourth full move guidance, could maybe quarter. you year about outlook it raised, Erie into a down the to as impact earnings strike And thinking start, at

drivers a color to bit So give more the John, that pressure? little key some on sequential you can of

John Olin

Sure.

But item our at the to on we of the strike our the workforce that It successful to our on one, Erie, cost goods to cost the some line we less it strike it performance given it's quarter. did and important with provide union be during quarter. efficiency of pleased was in number volume normal don't Well, the sold. never of of So reduced more -- agreement the is understand cost came important the couldn't the plant that we hence, closed a understand Justin, that operate during strike, strong of operating to under. know that the than the details

it drag terms took and quarter bit that. was overall, quarter earnings. of certainly, of So the we a delivered a on great little But in despite a in stride it

Justin, have, implied quarter you The fourth second I question to the guess. with regards growth,

X% earnings the call. I'd we're group EPS. guidance we our midpoint fourth quarter again, on QX, with of QX out kind expect And and revenue of XX% up and half grow X.X% the the and increase for expect likewise, this midpoint. start And to at despite we with X.X% with roughly and first, is that revenue that by in tough the is And the As pushes it comps very saying last Certainly implied growth guidance, unfolding. driven and at year's midpoint. favorable back margin that, pleased shared expectations EPS increased very had how overall, that the by over to XX% roughly we've that strong is at by

to third production Justin, So look half the fourth faster revenue for it's the the the driven we as plan half third quarter, when second at last by unfolding, and the the quarter second that's with is skewed growing we how quarter. quarter, it's and than just that considerably discussed fact significantly the

roughly deliveries meet quarter, that's second at be strictly expectations. our customer in the delivered XX% fact, it, of will the when In third you locomotive to Justin, half look and

schedules those ago. year So built over a were

So is to up prepared said strengthening in which underlying strong expect growth by is versus we transition consequently, profitable into the like prior which see -- And as XX% growth XXXX. backlog, our remains year. we strengthening evidenced very QX was XX-month by and Rafael the our comments, evidenced

Justin Long

wanted Okay. That's to backlog. about secondly, I helpful. And the ask

So particularly can multiyear move the timing, sequential see with of we I a some around. orders things know did moderation.

$X if not or up any MOU. confirm the or the that's in the backlog? in you this included just So you've chalk curious I'm you timing. Could inquiry just would And seen on if Kazakhstan, pipeline to levels slowdown billion

Rafael Santana

I'll take that one, Justin.

it's conjunction repeat multi-billion be orders first, backlog in It last don't backlog, talking the will the year. we backlog in you but year, is with every but about that So no, orders, got to not year-over-year, healthy. which at of signed down the it look

of convert are into signed multi-billion side one, a just orders. it, worked. opportunities And is a will pipeline that being other of large in the number which have The we we dollar and

here. We a slow we down. good So momentum see don't see

are progressing. We

quarter We're continuing and our John quarter, quarter up said, pipeline up this XX%. grow, as XX%, was last months, to it. supports Last quarter, third was XX

items if beyond. look to and deals signed long need momentum mods So locomotives, into as backlog 'XX with being key be and to we're you portfolio think lead in there, about here that it the your drive especially you continuing we and our and like has,

Operator

The Goldman Revich from Jerry next question of is Sachs.

Jerry Revich

we the it railcar as sounds a wonder of made, comments well. pretty if a that could Rafael, together John, order you I just backdrop, healthy like piece few opportunity constructive U.S. orders are

sounds you you've to you if better as X-year you than if we that And out level tracking. it's together. CAGR can on it does laid indeed out deliver, it margin could basis? XXXX revenue on improvement way that's touch wondering outlook might putting growth if So play that relative how confirm the X-year margin think X-year of a your improvement just you provided, can be the organic that, And outlook, that pieces about opportunity I'm like a the

Rafael Santana

backlog. of strong the have visibility expansion. to Jerry, first, with of you drive mind, which, to and results short- strengthened driven but of see, early the mean, as the get margin momentum see, to quarter, a that strong the bit by and have 'XX I'd we'll I mid-term being continue opportunities the start really for we -- in It's just continue pipeline say, the into specifics strength my guidance. I'll to finished sure with So revenue

So, up about XX-month digits. $X.X double backlog that it's the spoke at we billion,

and on piece, mods. both see new momentum we Second to locomotives continue

invest customers, for costs. to they're improved Our continuing

They're there. other out We're of investing in so this can still reliability. for trough So park modernization is the to units. coming they a bringing

the the with units strong here, as about have think need times, longer, we months. and next backlog times lead a of I XX here mods new you before, mentioned the need some If for and and the is lead here the and backlog, it XX you

international very on markets. bullish international. other for The me We're key is piece

We have the there. momentum

Kazakhstan, but what momentum South to and Brazil, They're Australia? Africa all 'XX. saw significant think I You about in driving if going

X.X. On benefit business benefit the the will Integration margin from further and side,

expansion as well. to So here we'll drive continue

all, So the all of in visibility. better opportunities, continue get we to pipeline

we've on a here to is best had this into position which call profitable fact, In strengthens year, deliver growth. stepping the our

Jerry Revich

point Super. performance plus? about got I Transit? ask improved execution we you orders about can can the I accelerating the levels? Are margin right performance. Really couple know off And sustainable business really over think there. given grow to at waiting on felt year we you're Has of your We've that appreciate in platform of really of a good the discussion. part comprehensive the past good a a these that the until earned the mind, of where topline margin

Rafael Santana

with to competitiveness. improve pleased continuing We're there. progress simplify the work that the the we're Jerry, further significant seeing and business footprint we're

variation going take to margins continue for to team to you're growth. but is think and see I that quarter-to-quarter, continue some profitable action committed to here expand

Despite the good I'll in the more, the are call fundamentals business. environment, competitive of

we'll think close up. progress really to other XX-month up. the mid-teen above the think -- book-to-bill about team backlog you If is ratio, X XX% I for drive XX over continuing our one, backlog is to XX%, and The is the margins. Multiyear year.

expect we and be competitive we're slowdown. the the in saying no business marketplace So yes, there, to more

opportunity to to fact, see with grow here the In we continue the business.

some there. backlog customers see record of we're continuing to the about think you If our had, momentum

Operator

is of question Ken from next Bank Hoexter of America. The

Ma Ho

Components Digital and on gross Ho mix up commented is results. XX%, through It you looking segment doesn't comment understand to just Congratulations looks level just the Services at I'm bit for I that is little dialing up like a mean, earlier Freight you margins. and could solid bit. more And in Equipment down is some mix dynamics segments. think maybe comment Digital of the This pricing little margins. Hoexter. usually X%. are the play? XX%, up Ken of the there team on the Nathan is to the Service maybe But John, I a some XX% about and I yet favorable and talk was team

John Olin

Nathan. Yes,

starting out, for up a in said that been pressure going a So quarters. of if quarter started X we to put counterintuitive, of what deliveries that third the last may we But little number internationally, of us, one, take the you really to back the quarters, through step what pointed when having mix locomotive a you the we've X amount discussion last fair overall it bit be the and XXXX again, really lot on right?

So fourth as fair we higher-margin move stepping a favorability. lower aggregate, digital, through in equipment's are fact still XXXX, are deliveries. even quarter a overall of of the than into we shining from And out a of that's the freight margin though given seeing, in amount we at that perspective mix

also The only a at well. mixed growing Freight the When groups, the mix other amount mix tailwinds the at piece adjusted it but and various of of XX.X% between not fair is groups, Transit right? as you that provides XX.X% at within look currency

Ma Ho

as continue maybe side, seems wanted the is sequential on of thought like fifth it declines. to on of the I prior quarter trend on Perfect. my noticed just And Freight I just follow-up, backlog. the the this

How we thoughts XQ or the or read we're quarter I commentary this? something multiyear helpful. would backlog, unit on mix? maybe think regarding Any is volumes just versus pricing any there a this comping -- should $XXX Is this be down this million.

Rafael Santana

lumpiness the see mind, multiyear playing keep the to through in think the the just will in play to lumpiness you're years quarters, I orders going lumpiness of And not we as out got out get. that that that well. first, you've

side are to we we're down that But we and year-over-year. the mentioned, it multibillion-dollar in we that the working As be other this to is which of expect not backlog, year, on, the convert. our orders backlog expect

the So the look of at I really us lumpiness orders. terms in of

you products, other why that's sure Do when times you've certain on the both need the have times making you we through think we got The lead piece we lead coverage you locomotives, and have on it? those, is of beyond very we about it new if 'XX. and that a to be so about it, strong coverage, 'XX, on have think I work to your Well about focused highlighted it. modernizations if have and think the you

Operator

Scott Next Group question is Wolfe Research. of from

Ivan Yi

Scott year strong very are for is This you and year? double-digit My to Can you're showing there? walk Yi kind What first EPS another this Ivan growth of through EPS Group. moving puts the on takes question, the of next growth year. parts

John Olin

very about year it's about talked our experienced for much what volume incremental growth. Ivan, XX% wonders driving expanding one, right? is is, think does margins, incremental growth we growth and We've to I similar to XX%. this

XXXX, that addition expect with would we revenue growth So incremental build EPS growth in will in that. we which volume, to

The other as is, X.X. Integration mentioned, Rafael had

we're to just X So of starting that the quarters X-year ramp the of we're savings was of the to in largest in a to get on terms seeing plan. first And ramp investment, the this due and up expect XXXX. savings in kind that growth but to that program the year,

little bit long-term will as overall, XXXX, with sit guidance. look in long-term we expect with But that Rafael forward that, a And overall today to and expect margins we profitable objectives to. So we line to spoke that our growth that, drive faster be than our and again, revenue.

Rafael Santana

just an I Kazakhstan with here are market. have is spoke specifically and which markets. this points, significant, other and very X we 'XX Australia, Africa, into momentum element walking international of Brazil, reinforce significant I'll which South about

So we do expect significant perspective. sales from growth a there

as other piece certainly into look we which the stepping XXXX, we've is, stepping year. the of any coverage given coverages the into into strongest is again, had And one

Ivan Yi

just kind on, the is backlog, to one or those is is one just And multi-year? on, happening? X-year the down. which one divergence? backlog. Can that go year again, on then And of through of up the that The course, the the backlog but better a nicely Why focus year-over-year, is of you multiyear metrics follow

John Olin

-- got here. I I've go first, to back the highlighted things

don't order and getting you this items. the here locomotive much Other not at coverage you coverage, sure on the make you're the You've have an 'XX, a you can there's long there. point got wise, lead do have for to new especially

the lead and important, we So having for have long that items is coverage it.

fleets The the about internationally second to our is continue piece fact grow. I talked

So just an we're there, but CapEx perspective. from momentum OpEx seeing good a from not also

continued for for North really continues improved of, costs I'd So efficiency, that's in discussion Customers to America, parking very improved lower grow despite positive. levels. reliability. for investing And are say,

So all and 'XX, in all, here, North to when look continues aligned growth to very America the guidance it CapEx into think we about momentum looking much the and long-term OpEx, internationally, at profitable going to we've provided.

Operator

Next Elkott question of Cowen. is TD Matt from

Matthew Elkott

take If were sequential forward backlog year? you that in we deliveries the is guidance next and moderation XX-month were year together, to it for have because the the raise some this and scheduled pulled

John Olin

XX% look No, quarter a half. we've we would look on to said grow no. is year at make that on in you set quarter locomotives. larger our the in a all, up year plan terms expected. function of the the the when back production at the our first beginning faster talking was it's XX% And again, the the we on way But deliveries particular, about way that's half. and and second versus we to half, the quarter fourth at than versus half of a little growth the is over half. Not the equipment, ago together, the year, that lot what it, bit implied expected what we've first in of in see growth them half some first And third been a would really we're look the in fourth the at third at between And to in second seeing I think growth of Matt.

third XX% locomotives had second about I of plan versus delivered halves for fourth quarter. the is in the production that as the mentioned And quarter

when growth, the XXXX up you explains in terms course, of Rafael second And very fourth going much quarter, to overall, quarter. grown strong third as raise into higher we with XX%. mentioned, underlying we out, in as quarter just the exit even level momentum the those And the overall at the of as the we've feel couple third which quarter. the a But cadence good had the quarters. and expectations, year as revenue a the it's So of backlog for as growing is actually third last had sequentially of

Matthew Elkott

helpful of materialize very Can -- that it $X know. 'XX? much John. how much more And do materialize orders the you in Kazakhstan in a -- my bit question, And MOU? that's 'XX? could in one about just talk billion follow-up to you in think a No, could bit How about deliveries

John Olin

We're expand billion opportunity, not given they've flow turn we're the and fleet their products some the so got We've all but of dynamics from they break their them And of manage Europe. $X to of to China expect Kazakhstan upgrade fleet a growth with to of the that working certainly can their customer to in it, great timing into a out got it going tremendous of orders. and we would future.

Rafael Santana

I the would following. add

some to strong increasing a that convert. part as of international said, deliveries in Kazakhstan, going large we're expect growth to 'XX. it's I And We markets, about and

Operator

Jefferies. The Boroditsky Saree next from of is question

Saree Boroditsky

mentioned it to way year. update versus building on quantify provide on any your next there? into progress X.X seeing kind integration benefit margin of into you an you're XXXX? How going And is savings you So the think comments, from Could just I the the expectations? largest

John Olin

Yes. Saree.

we So if integrate, the XXXX. restructuring And of beginning as you and a the in savings X.X programs recall was program X-year the in investment at type often profile the Integration beginning projects a back that started these opportunities or higher any see of we'll that higher executed. get on profile a of to

at at $XX and million build end And being we we've $XX looking about what now Saree, So ongoing savings we're $X or look moved the either of that -- we're products had million. the over to of those savings build. And we to that up the starting facilities of invested out about to just or million as seeing over and X-year next $XXX million period being consolidated an start million about date, or projects $XXX to and to XXXX, to however, of for continues those expected $XXX are optimization, are to that escalate, million time. is

momentum can need $XX So million quantify be we in we it, run the at to start but $XX have you XXXX. million to to see rate of to won't that a

Saree Boroditsky

this quarter. of weaker partially typically a maybe related, is would margins pretty then And Great. despite strong, kind what came but seasonal Transit be in

of does improvement look XXXX? you there? this And into So what up kind we that margin how as drove set

John Olin

the It we're pleased Number by of driven of with X.X is Yes, margin. certainly favorable very currency absorption XX.X%. cost couple things, Transit given a percentage volume was one, points fixed growth the up Saree. was ex

mix mix. The was also, So when fair helping grew product a look at Product amount driving fair amount our other about And And favorable if faster that's that OE. it. Transit right? we talk in business, is you area X.X, aftermarket of a Integration than the Transit. hits

And also had inefficiencies ago cyber some the quarter. in we that of year in lapping the we're

the a very forward. and certainly mentioned good So feel I business about bright we future had business, transit that move as continue as to Rafael

Operator

from is Wetherbee of Chris question Next Citigroup.

Unknown Analyst

like that It's yet second Chris half right expectations your now, for loaded? year, terms first Or kind for the sight Rob you line of half not of more timing do have update on you next of this one? us as in on give an Could of delivery orders or morning.

John Olin

to early for us talk a talking bit as Yes. Rob, start gating. to us for guidance about It's early little about it's well.

in again, be profitable time, we're what's looking done. call certainly in but cadence detail driving more a that quarter's the And after typical February regards XXXX, what with the we'll certainly in guidance year broadly, would growth and have to it. in at is So another just is to provide

Unknown Analyst

backlog, looking we're some bit That's this of a does you worse? Is next -- thinking compare a we're is helpful. mix might And early as have Do well. mix As takes the at better? just XX-month too the year. sense that today? kind it to be little how of puts and the it If about for

Rafael Santana

provides the I more really probably ahead, America. And markets certainly about North in and that of I with our I on into think it right? think connected year. -- locomotives, strongest that's terms it strong of parts of walk lead be think new to And strongest looking I piece we've comments and any my where think both portfolio. the in a that's international about coverage to conjunction it mods had the has and it of long coverage the And

Operator

Research. The next of Rob from is Melius question Wertheimer

Robert Wertheimer

just and and strike whether of though, can more the leverage margin rising. I the what get pretty I the follow-ups. a the would give should you X and takes. I whatever from next any any margin on John, wrong, quick think or line. puts I just wondered mean, margin clear leverage don't cost but gross gross the I incremental been some normal on had labor you've mean, keep great across on that absent year me SG&A has gross fixed pressure enterprise, be comment

So that comments on just would be helpful. any

John Olin

Yes.

what you're in year-to-date the is that also a on margin. first had from we that think had right? a gross and gross but impact seeing Erie strike margin a mix in that on the basis standpoint, I about, We from drag certainly half, mix an talked headwinds

at gross strike we would of again of was expect when the flat, as affected margin, a Erie, but directly into at tailwind X.X, look And benefits that margin this move margins on and the a we quarter, because forward. we Integration by fits that. So gross lot

And the cost SG&A. the biggest right? fixed driver leveraging manufacturing that's portion business. volume, And only the margin And then structure fixed costs, but not of is fixed the of also of also

XX% we continue we in the incremental sure aggressively our range. cost manage structure we that grow, be and as to to we expect expect to making would those volumes, which, deliver do to XX% So again,

Robert Wertheimer

sign close last stop. to still peaked think, particularly has I early there out, will Perfect. then customers. we And then that Mining some Are and cycle? strong, commentary in that Any I for one Just out? any your one that, of really

John Olin

don't didn't part the I first -- question. we the of caught we think So

Robert Wertheimer

is Mining of or just especially quite pardon. some that could I'm continue strength Beg whether strong, I curious signs if that plateau? seeing for think, any you're customers. your

Rafael Santana

is the year into very is right It next continues. strong that and now of we've all got Mining as momentum indications well. continuing

positive we the see the of certainly that's momentum another on one business. that So

Operator

of The Capital next question Markets. is from Barger Steve KeyBanc

Steve Barger

X GE will do think that Do same How speed at Or a way years plan, some has from does to meaning but the you monetization around the deal. structured now? things it's run backlog about up revenue years around go that it Backlog contracts. post billion be meaning accelerates been for you Rafael. point, stable $XX term? X think long rate, at the if of natural the as

Rafael Santana

Rob, for coverage where like thinking and I'm I -- the just sure now. the think a piece that running you're I'll numbers call focus got the on specific to coverage look what of has not from supports business. going that profitable we've ahead, focus we're really That's is give you growth a I'll years we the X making you big been. how as tell right? business, strong There

for in a In fleets a there's go customers. long-term the some period We've back, on what with focus, mix fleets managed agreements maybe depending are of the that parts on cases, we that past, different covered of with In the take multiservice if agreements. a long especially you time. might approach lot

managing thinking So opportunities improve I more in upgrades as we the think we we're that about of delivering, more levers we terms to introduce all all, are be really efficiency and that lot drive help? like all, those But got value fleets. profitable in for fuel to our talk through that things that the A about driving ourselves that continue momentum we expect sure and mean, both in with to we're all want value to growth. of We process. that make forward to customers I Does and that. especially

Steve Barger

for pipeline fair? down, business manage like it so. expect If to sounds do the at forward and you'll that that years you boil revenue just Is foreseeable future? in when think backlog look the the how you can Xx try I your I Yes, that have you

John Olin

we index think -- we put it. I don't an on would can

X the years, and oscillate Just last the over we've between seen looking XX.X it at XX.X. backlog

parts are seeing we And the burns it right? think then 'XX into exactly economy have that's big that. when in goes we see kind that And off. what that it 'XX, orders, I of of we're to of rise and -- periods

And those off, lapping we we're X%. that or it in work 'XX. about $X rise We as saw billion X% numbers and down backlogs

back So but coming don't I is depending on is there's lumpy, word very it. it long you we -- a keep multi-years. time, that over lumpy would period it to put can a what expect rise, think I this think formula We on of to

XX best I lumpiness we and kind the don't to to at on that, of gaining and for the months, been this way right? growing X the and remove neutralize quarters think steady the -- year has momentum. up very So XX been is we the look month has

Rafael Santana

ups through There lot a cycle. before I'll This done. downs the go transactional the is of, call, was that a business and was

investments which I that has are making is I'll one sustainable the for well of been ecosystem. entire things to plays think purposeful customers we the team what the working call on moving forward, with very sure drive

quality, run getting programs. of value element right of huge an to these ultimately the some making the that's to sure the products, focus. It's been for as And part better ultimately right of we're a that costs the we

infrastructure around there continuation XX-month customers of it. you about of sure focus for significant to lot XX, that a world. that got make of them of play got assets If think a the agreements the backlog these the the longer-term And delivery the that will some XX, that's on part of the we've supports out we've

Steve Barger

only the $XX is color. good is variance not that That's a lumpy. mid-single-digit percentage average And Yes. X-year around comment I'll billion make now

I to have love think of would that. a lot companies

And tell a strike, was and a to John, for margin fair to record revenue in and XXXX. Can could not quarter don't specific we it follow-up, revenue into XXXX? what been? I be say get line since high items think as will watermark the about this you this margin my Freight is As us want segment have know quarter but you best around the Freight

John Olin

was No, effort Steve, this say able I would that 'XX, Well, piece, and deliver tremendous to XXXX, be like we it is, expect locomotive a and without. I And to can't overall talked on revenue right? out look that 'XX continue to again, pull the the shift. can growth to and I part of grow in it All what that. the company well company about that beyond

the locomotives. We quarter our with at we in largest intending to that deliver were strike plant second delivered the XX-week the makes that all locomotives

continue company to a it's whole the to through to So the pulled together tribute and strike. work tremendous how team the

Operator

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

Kristine Kubacki

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

Operator

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

disconnect. now You may

Westinghouse Air Brake Technologies (WAB) 25 Oct 232023 Q3 Earnings call transcript